The new NHS Direct helpline was given a clean bill of health by the National Audit Office on Friday.

In its report the government spending watchdog praised the service for its smooth introduction, which cost £22 million, its associated website and for achieving its target of awareness among 60 per cent of the population by March 2002.

The service cost £78 million to run between 2000 and 2001, with projected costs for 2001/02 at £99 million as usage doubles. However, the NAO estimated that half these costs were offset as NHS services were used more efficiently.

The report also said that only 64 per cent of callers managed to speak to a nurse within five minutes in the year up to September, compared to the government target of 90 per cent. A fifth of callers had to wait more than half an hour.

Use of NHS Direct also varied among the social groups; Younger people and the over-65s, ethnic minorities and the disabled are among those calling least, and the report recommends that more efforts are made to raise awareness among these groups.

"It was a significant achievement getting NHS Direct up and running in less than three years. The service is valued by those who use it and, according to the evidence available, is starting to meet its aim of directing people to more appropriate forms of healthcare," said head of the NAO, Sir John Bourn.

"The challenge now for NHS Direct is to meet the expected rapid increase in callers and to set a clear future direction for the service. NHS Direct should also address the fact that some social groups are tending not to use the service, and increase the proportion of callers who are promptly connected to a nurse."

However, Liberal Democrat health spokesman Dr Evan Harris described the report as "polite castigation" of the government.

"It has cost £80 million without producing any significant impact on the rising demand on accident and emergency departments. NHS Direct has saved only an estimated £45 million from reducing calls to GPs," he said.

"Worse still, the report recognises that 80 per cent of the nurses were recruited from the NHS - mainly from the hard-pressed and short-staffed accident and emergency departments."

Chairman of the Royal College of General Practitioners, Professor David Haslam said he was encouraged by the report's findings, but warned that the helpline was no substitute for personal care.

"I am encouraged that the National Audit Office report has received positive feedback from patients about NHS Direct. The system appears to provide a useful out of hours service and has helped to reduce GPs' workload. However, there is no way NHS Direct can match the continuity of care provided by General Practice," he said.