Over two-thirds of UK companies are doing business with customers over the internet, according to an e-business study by the Confederation of British Industry.

The figure is up 50 per cent on three years ago, and marks the steady rise of internet use in most firms both internally and externally.

Externally the majority of firms now give staff access to the internet and almost half provide remote and teleworking access to their business, up from just 10 per cent in 2002.

There is less talk of online exchanges than in the dotcom boom, but 78 per cent of businesses pay suppliers electronically, 58 per cent process orders on the internet, and 51 per cent schedule and track orders online.

Forty-five per cent of firms now transact online whether or not they have back-office integration. And 16 per cent consider themselves to be 'fully networked' compared with six per cent in 2002.

On the decision-making front, for those businesses with an e-business strategy, 63 per cent now say they involve the board in the decision-making process, compared with 41 per cent in 2002.

Reasons for doing e-business were reported as cost cutting, improved internal communications, improved customer services, and meeting regulatory and security compliance.

Security remains a key concern. Some 93 per cent of firms said they were keen to put security measures in place against employers, and about two thirds expect security concerns to affect the integration of supply chains.

John Cridland, deputy director-general at the CBI, said: "Britain used the power of steam to change the world 200 years ago. A different power, e-business, is changing Britain today. We take it for granted that we now buy, sell or book almost anything we want on the internet."

Alun Michael, minister for industry and the regions, added: "We are now reaching a point when it is as strange for a company not to have a fully integrated e-business system as it was 50 years ago for it not to have a telephone and typewriter."

The E-Value Matters report was sponsored by the Department of Trade & Industry.