The US beat the UK to the top spot as the best place in the world for e-commerce, according to the government-backed benchmarking report from consultancy Booz Allen Hamilton, which was released at the e-Summit in London last week.

The study shows that Prime Minister Tony Blair failed to meet his pledge three years ago to make this country the premier environment for e-business by 2002.

But the government has declared the result a major success, and appears unconcerned that it missed the target, arguing that the US is more progressive when it comes to technology and the internet.

"This is an achievement many thought impossible four years ago," said Trade and Industry secretary Patricia Hewitt at the launch of the report.

"We've made real progress in key areas: a growing IT sector, a sophisticated venture capital market, among the world's lowest prices for internet access, and the highest penetration of digital TV in the world," she said.

The report, International eEconomy Benchmarking, the World's Most Effective Policies for the eEconomy, looked at the online state of the nation in the UK, the US, Australia, Japan, Canada, Sweden, Italy, France and Germany.

It focused on four areas of e-commerce: environment, readiness, uptake and use. The UK scored particularly well for its environment, demonstrating a combination of factors that contribute to an overall healthy climate.

The report explained that "sustained policy focus" has been central to this success, and highlighted areas such as "IT in education, stimulating investment, and internet access price regulation".

Digby Jones, director general of the Confederation of British Industry (CBI), applauded the number two position.

"I don't think there's any point setting easy wins," he said. "It's better to set a difficult target that you may not reach than an easy one that won't push you.

"Great gains have been made. What we are talking about today is creating an opportunity for businesses and the people who work in these businesses."

The UK performed well in terms of market environment, with a good educational infrastructure, a strong venture capital centre and a large and growing IT sector.

This country also has positive political and regulatory leadership, according to the report.

"The UK has relatively strong and committed political leadership of the e-agenda, the organisational structure and resources to back this up, and the legal framework to support e-commerce," it said.

Booz Allen Hamilton said that the UK has one of the most comprehensive e-government programmes, largely thanks to the 2005 online targets. It praised the e-commerce strategies of individual government departments, and made a special point of mentioning the Government Gateway, the secure authentication portal for online services.

"The UK has been in the vanguard of developing common IT architectures, and was ahead of most of the benchmark group in developing the IT core to allow secure transactions with citizens, the Government Gateway," the report said.

The business readiness for e-commerce in the UK was also found to be strong, with the country coming third behind Sweden and Germany. Booz Allen Hamilton sees no reason why this situation should change, although business attitudes to the internet remain relatively conservative.

The government is committed to further improving our standing as an e-commerce nation, demonstrated by Blair's promise to invest £6bn in IT and communications over the next four years. But there is still much work to be done in other areas.

"The UK's strengths are in its market and political environment and in business and government readiness," the report said. "Its relative weaknesses are in its citizen uptake and infrastructure."

The biggest problem is user penetration, the number of people actually using the internet and buying on the web.

"The UK is among a mid-ranking group of nations studied in terms of citizen uptake," said the report. "Despite moderate levels of household penetration and propensity to buy online, the UK still has low levels of residential broadband uptake and relatively low frequency and duration of use."

Perhaps a greater concern for the government is the low number of citizens using online government services, even though about 75 per cent of thses will be web-enabled by the end of the year, according to eEnvoy Andrew Pinder.

Hewitt pointed out that only one in 10 UK citizens have used online government services, compared with half of the Canadian population.

"We're giving a greater focus to the most regular transactions, such as personal taxation and benefits, and have enhanced the 2005 electronic service delivery target to include a clear target in take-up, not just availability," said Hewitt.

Pinder added that the climate has changed significantly since the targets were set. "It's no longer enough to have all government services online by 2005," he said. "We must be more ambitious about getting services online. If we have the citizen at the heart of these services, we'll see better uses."

There is no room for complacency, however. The government cannot afford to sit back and congratulate itself on achieving second place in the world, thinking that the job has been done.

"The UK will need to focus on maintaining the momentum and leadership position it has established, if it is not to be overtaken by the other nations," said the report. "The e-agenda will need to remain a high-profile topic, particularly the delivery of e-government."