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The government must be ready to cancel or renegotiate the private finance initiative for delivering big infrastructure projects where they are not providing value for money, according to a spending watchdog.
The National Audit Office said the government should do more to act as an "intelligent customer" in the procurement and management of PFI projects.
The watchdog said civil servants should use the state's huge buying power to urgently find alternatives deals, and boost their skills to avoid being outwitted by private sector counterparts.
In the report, auditors called for "robust, impartial scrutiny of the business case" for PFI projects, and warned the method could be tempting as the coalition seeks to tackle the deficit.
It called on the Treasury and other departments to identify alternative methods for delivering infrastructure and related facilities services, to maximise value for money for government.
The NAO concluded that in the current climate, the use of private finance may not be as suitable for as many projects as it has been in previous years.
It said the lessons from PFI can be applied to improve other areas of procurement to help the government achieve its aim of annual infrastructure savings of £2-3bn.
Amyas Morse, head of the NAO, said: "The public sector should make better use of the hard won lessons from the extensive and substantial PFI programme.
"This means acting as a more demanding and intelligent customer, by harnessing government buying power through concerted tactics and tougher negotiation."
A Treasury spokesman said the government welcomes the findings and is "taking steps to address some of the problems previously identified in PFIs".
"Going forward, all PFI projects will be considered in line with new guidance issued for major projects, this is based on the value and risk associated with the project, so ensuring all projects receive a suitable level of scrutiny.
"In the Spending Review, the government chose to strengthen the spending framework, by transferring responsibility for the revenue costs of local government PFI projects from local government to the sponsoring department to remove incentives for projects to be delivered through PFI. The government is also examining ways of reducing ongoing costs in PFI contracts."
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