The government's annual spending review will see the e-Envoy's budget slashed by a quarter, reports have claimed.
The Office of the e-Envoy is responsible for driving plans to get government services online by 2005.
But according to The Independent, e-Envoy Andrew Pinder faces seeing his £20m budget reduced to £15m.
The prime minister's enthusiasm for the e-government project, dreamt up by former Labour golden-boy Peter Mandelson, has apparently cooled.
A spokeswoman for the e-Envoy explained that she was unable to comment while the official spending review is on-going.
"But Andrew Pinder is confident on having the necessary resources," she said.
Take-up of online services has been poor. Research from Portfolio Communications suggests that only seven per cent of Britons have contacted their local authorities using the internet.
The elderly remain by far the highest users of council and social services, but are typically the least likely to use the internet.
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