There are still "significant challenges" ahead for successful implementation of the NHS's controversial IT programme, the National Audit Office (NAO) said today.

While recognising that there had been "substantial progress" on the project, there were still three key areas to work on, it said.

The NAO put the total expected cost of the project at £12.4 billion and said suppliers were the ones being hit financially by the delays.

The £12.4 billion figure includes the original £6.2 billion cost of contracts and various other costs, including replacing core contracts which expire before the end of the 10-year period.

There has also been widespread confusion over the total cost of the programme, with Health Minister Lord Warner saying last month he expected it to be around £20 billion.

The NAO said today it understood that Lord Warner intended to refer to the total IT spend for the NHS over 10 years.

Chris Shapcott, from the NAO, said that figure was a "reasonable estimate" for Lord Warner to use.

Lord Warner has said the widely quoted figure of £6.2 billion covers infrastructure and applications but does not cover areas like training staff at a local level.

Mr Shapcott said today that "time will tell" whether the project will have been good value for money and whether it can deliver "the best results".

The challenges noted by the NAO include ensuring that IT suppliers "continue to deliver systems that meet the needs of the NHS and to agreed timescales without further slippage".

The Government and NHS Connecting For Health, which is managing the project, also need to ensure that NHS organisations "can and do fully play their part" in bringing in the systems.

There was also a challenge in "winning the support" of NHS staff and the public.

Doctors' leaders have raised significant concerns about the programme, including regarding patient confidentiality.

The IT programme involves four main projects: the online "choose and book" appointments system; a centralised electronic medical record system for 50 million patients; electronic prescriptions; and fast network links between NHS organisations.

The NAO report said the patient records system was running two years behind.

It said: "Deployment of the national clinical record is now planned in pilot form from late 2006, compared to the original plan of December 2004, and in its full form from late 2007."

The take-up of choose and book has "been slower than initially planned", it added.

Gainsborough Tory MP Edward Leigh, chairman of the Commons Public Accounts Committee, said the project "must not be allowed to go the way of so many other ill-fated Government IT projects" and that the report "makes worrying reading".

He added: "If this project is to succeed, it not only has to be delivered on time and to budget, but also win the hearts and minds of the staff who work daily in the NHS.

"This is not happening at the moment. Many staff, including GPs, are alarmed and dispirited by having the new systems imposed by diktat from above.

"They are also often confused about what the new systems are going to do and when.

"At the moment the jury is out. But today's report makes worrying reading.

"We now know for the first time that the £6.2 billion announced as the cost of the project over 10 years is wrong. NAO analysis indicates that this is only half the story and that a figure of £12.4 billion is nearer the mark.

"And the NHS Care Records Service, making information about patients available nationally to clinicians, will be rolled out in GPs' surgeries two years late.

"We are only a third of the way through the life of the contracts, to 2013/14, but already the signs are ominous."

Shadow health minister Stephen O'Brien said: "This report sheds some light on the Government's NHS IT programme.

"Far behind schedule and ill-planned, the Department has constantly tried to shield it from public scrutiny.

"It is something of a curate's egg, but that is of no comfort to the Government, as all the bad bits lead straight back to Patricia Hewitt and her ministers.

"Political leadership has been woeful given the extent and risk of taxpayers' money involved.

"Patricia Hewitt must take responsibility for delivery, starting with a zero-based review of the whole programme, which the Conservatives called for at the last election."

Mr O'Brien said clinicians and managers "were not adequately consulted" over the project.

"No wonder there is a lack of ownership by those on the frontline of the NHS - Patricia Hewitt is all talk and no action when it comes to trusting the clinical professionals in the NHS."

The 10-year programme is expected to link more than 30,000 GPs in England to almost 300 hospitals.

Yesterday, Lord Warner announced plans to speed up implementation of the electronic record, including announcing a date in 2007 when pilots would begin uploading the information.

A taskforce will also develop a "detailed implementation plan" for speeding up delivery of the electronic record, he said.

This will be accompanied by a public information campaign on the benefits of moving from paper to electronic.

Lord Warner said: "We cannot carry on with the cumbersome, outdated and, I would say, sometimes dangerous paper-based system."

The NAO report said that, while the majority of staff were positive about what the programme was trying to achieve, three out of 10 staff "knew nothing" about the programme, just under half "knew a fair amount" and just one fifth said they knew a "great deal" about the programme, in a July 2005 survey.

Four per cent of all those questioned said they had "not heard" of the project.

Within staff groups, awareness of the project was lowest among doctors, nurses other health workers and highest amongst IT managers, it said.

But the report also said the programme has "the potential to benefit substantial benefits for patients and the NHS".

Agreeing the contracts with suppliers was also "completed commendably quickly", it said.

The Government has said it already spends around £1bn a year on IT and that that figure must be taken into consideration.

Prime Minister Tony Blair's official spokesman said: "The report says that the NHS computer system is much-needed, it's well-managed, it's based on excellent contracts which - because they were excellent contracts - saved some £6 billion than otherwise would have been the case.

"It is delivering major savings. It is on budget at £12.4 billion and has made substantial progress. That's what the report says.

"Therefore, what the NAO has confirmed is that the cost of the programme has not over-run.

"What it will provide is much-needed coherence for the first time to how the NHS uses its records, its X-rays and does its bookings - all of which can't be done as efficiently and effectively as possible with a paper-based system.

"What it will deliver, for the first time, is real choice based on real information to patients up and down the country."

The report noted that the original £6.2 billion for contracts was now £6.8 billion because the NHS was now purchasing additional services.

However, there was no suggestion in the report that the entire programme was dramatically over budget.

Britain's biggest trade union, Unison, urged the Government to keep a tight grip on the costs or face anger from staff facing job cuts.

General secretary Dave Prentis said: "It is essential that we have IT systems capable of delivering first-class healthcare across the UK.

"At the moment staff waste a huge amount of time paperchasing records or working with computer systems that don't talk to each other.

"However, at a time when our members are facing job cuts and redundancies, they will be shocked by the spiralling costs of the new scheme.

"The Government must keep a tight rein on costs or face widespread anger from staff who will say that money could have been used to wipe out deficits and improve patient care."

Dr Gill Morgan, chief executive of the NHS confederation, said: "Today's NAO report recognises that significant progress has been made in the development of the National Programme for IT, but asserts that key issues remain.

"The key challenge now is to make sure that all NHS staff, especially the clinicians who will be using the new IT system, are fully engaged with the project as it moves forward.

"This is essential, because the benefits of a national IT system that allows patients' information to be shared quickly and easily across organisations, and integrates services through cutting edge technology, are immense.

"This is the most complex IT programme in any public sector organisation, apart from the military. A programme of this magnitude is bound to experience some problems and delays, and create concerns.

"But we must remember that, whilst it is regarded as an IT project, it is actually about transforming services for patients. And the biggest outcome that the programme should be judged on is patient safety."

Tony Blair, speaking in Brussels where he was attending an EU summit, said: "According to my information, when you actually study the report it actually shows the IT system - which is absolutely essential - is on budget, that we are actually getting efficiencies through it and it's well-managed.

"Of course, as with any such huge programme, there will be improvements we need to make but a more balanced appreciation of the report would be sensible."

Tony Collins, executive editor of Computer Weekly, said there was still a need for an independent inquiry due to the limited scope of the NAO's report.

He said: "That's the message we are getting from the industry. Concerns over the programme are as deep as ever. The need for an independent audit is more marked now that it has been before. The report absolutely reinforces the need for an independent inquiry."

He said the report "raises more questions than it answers".

While there had been substantial progress, that progress was in the least complex areas of the programme, he added.

"It's a work in progress but the NAO's figures are estimates. I think one of the concerns has to be that we still don't know how much the programme is really going to cost."