The new £311 million Home Office headquarters will lack the space necessary to accommodate David Blunkett's army of civil servants, the National Audit Office has said.

Despite the observation, parliament's spending watchdog concluded that the PFI project still represents good value for money.

From 2005 the building, which is currently being built at a site just minutes from the House of Commons, will provide a base for 3450 civil servants.

Liberal Democrat home affairs spokesman Simon Hughes said the report showed the government should "get its act together".