Cramped office conditions and old equipment are harmful to staff and productivity, an experiment into the effects of poor office design has shown.

A study carried out by The Mind Lab set up two environments: a 'battery' office with cubicles, slower computers and CRT monitors; and a 'free range' office with open spaces, laptops and mobile communication devices.

Workers in the 'free range' office saw their IQ rise by 28 per cent in the more open conditions, while their stress levels fell by 50 per cent. Short-term memory increased by 33 per cent and blood pressure levels fell significantly.

"On every measure, from memory to IQ to the speed with which new information was processed, the 'battery office' produced a marked decrease in intellectual performance combined with a sharp increase in stress levels," said Dr David Lewis, a neuro-psychologist and research director at The Mind Lab.

"The study clearly shows that restrictive working conditions are not just bad for employees, they are bad for business."

At the same time HP, which bankrolled the research, released the results of another study showing strong demand for office-free working.

Nearly half of the 800 people surveyed indicated that they would prefer to work from home and have more flexible hours.

"This study and experiment really do back up what some businesses, large and small, are already experiencing," said David Wright, vice president and general manager at HP's Personal Systems Group.

"By introducing more flexible working practices businesses could create a happier workforce, which will ultimately lead to greater employee retention and improved business productivity."

Nearly half of the respondents indicated that they are more productive at home, and 45 per cent said that they are more motivated.

Working from home is also less stressful, according to the results, with nearly a third saying that office work left them stressed out.