The report, compiled for the Department of Trade & Industry and the Office of Envoy, compared the UK with the other G7 countries as well as Sweden and Australia.

Criteria for judging included the availability and cost of broadband, the number of government services online, the number of businesses using ecommerce and the contribution of ecommerce to GDP.

In placing second, the UK beat the US when it came to number of businesses trading online, but lagged behind other countries on such things as broadband users.

The report should give impetus to Tony Blair's pledge to have all government services online by 2005.

Government e-envoy Andrew Pinder said the report was 'a measure of how fast we are progressing'.

Pinder said 73% of all government services would be online by the end of the year, while the rest would be online in time to meet the government target date.