Whitehall must learn the lessons of botched staff relocations, parliament's spending watchdog has said.

In a report published on Wednesday the National Audit Office concluded that civil servants at the Government Communication Headquarters (GCHQ) failed to appreciate the implications of the decision to move to new buildings.

As a result, the costs of moving GCHQ's technical capability increased by more than 10-fold to £450 million, the watchdog found.

To reduce this bill to £308 million, older buildings will be kept in use until 2012, at a running cost of £43 million.

"When a government department is considering major investment in new accommodation, the full scope of the requirement really must be properly defined from the outset," said auditor general Sir John Bourn.

"In this case GCHQ failed to consider all the implications of the fact that it was relocating its entire business capability to a new building and that transition of its computer systems to the new premises was a major factor.

"However, other government departments might learn lessons from the way that GCHQ developed its programme management arrangements for this major hybrid change programme.

"Departments should follow best practice and should especially focus on introducing programme management procedures to identify, plan and then deliver all the benefits attainable from their PFI programmes."

Overall, however, the PFI project was well handled, the report found.

Although the budget increased by more than a fifth during the 21 months between the appointment of a preferred bidder and contract signature in June 2000, this was mainly caused by the need to address omissions and was done in a competitive environment.