Parliament's spending watchdog has said the Ministry of Defence should invest more in reducing deaths by "friendly fire" in combat situations.

The National Audit Office report on "combat identification" warns that with the three armed services working closer together than ever before, more work needs to be done on systems to prevent British troops accidentally firing on each other.

The complexity of modern warfare, an increasing reluctance on the part of the public to accept casualties in warfare and the need to maintain military morale are among the reasons cited for doing more to address the problem.

The NAO says that American research indicates that between 10 and 15 per cent of all causalities during military operations are caused by the accidental destruction of friendly or allied forces.

In July 2001 the MoD approved a policy paper on combat identification and an action plan to take its policy forward.

"It has communicated its strategy well to key stakeholders. However, it has more work to do to see its strategy implemented in full," said the NAO.

Experience during the Kosovo conflict has highlighted the need for proper identification systems, said NAO chief Sir John Bourn.

The use of important defence equipment had been hindered by the need to minimise the risk of friendly casualties, the report found.

The MoD is working closely with NATO on combat identification, as well as investing in a £396 million project that will operate predominantly in the air environment.

But the ministry is warned that its programmes will leave "some gaps in capability most notably in the land environment".

"The MoD has worked closely with NATO on combat identification. Generally the MoD is well represented and active on the relevant NATO combat identification bodies, although the MoD considers that it does not always have adequate resources to participate as much as it would ideally like," said the report.

"The MoD now has a policy on combat identification and a strategy for taking the policy forward. In conjunction with NATO, it has more work to do to see its strategy implemented in full and my report makes recommendations to assist this process," said Sir John.