The Department for Transport could save at least £33m through investment in electronic services, says the government's spending watchdog.

The saving stands to be made in addition to re-couping the £60m set-up costs of putting fifteen services such as renewal of tax discs and booking driving theory tests online.

So far the response is good. Some 67 million electronic transactions were carried out in 2006/7 through departmental agencies such as the Driver and Vehicle Licensing Agency (DVLA) and the Vehicle and Operator Services Agency. And of those web services, 16 million had a paper or telephone alternative available, says the National Audit Office (NAO).

But the agencies must boost take-up and refine some aspects of the service for the full savings to be made.

Possibilities include using the Department for Work and Pensions' Customer Information System to validate identity and reduce driving licence application rejection rates and email reminders of car tax expiry.

"Bringing services online can save money and raise the quality of the service received," said NAO head Sir John Bourn.

"By following good practice, the agencies have improved the service they offer drivers.

"However, there is scope for improvement, and I would urge the department to continue to evaluate current pilots and investigate ways of using the technology to further improve the service offered," said Bourn.