Government involvement in the Cambridge-MIT universities link has been praised by its own watchdog.

The CMI, a company jointly owned by Cambridge University and the Massachusetts Institute of Technology, was founded in June 2000 after negotiations handled by the Treasury.

Over the next six years, government grants to the company will total £65.1 million, while £27 million had already been spent up to November 2003.

In its report published on Wednesday, the National Audit Office argued that while the project has had some early success and has potential for "considerable" future successes, there were lessons that could be learned.

Rather than creating new systems for appraising a new project's economic and financial viability, as was done in the case of CMI, standard procedures should be adapted to meet the requirements of the new project.

The Treasury could have used expert opinion from the Department of Trade and Industry earlier in CMI's creation, while more time could have been given to establishing a satisfactory infrastructure for the initiative.

"CMI has the potential to generate considerable impacts," said adutor general Sir John Bourn.

"Many of these will be long-term and are intrinsically difficult to measure. After a challenging start, I am pleased that CMI and the Department of Trade and Industry have been taking steps designed to maximise long-term success.

"Public sector organisations are increasingly expected to manage innovation, and we look to them to learn from the experience of CMI to improve their appraisal and management of innovative projects."