The PAC also accused the Government of failing to provide information on whether electronic services to the public are actually working properly or not.
In its report entitled Improving Public Services Through E-government, the all-party group of MPs, said, "Departments frequently justify their significant investment in IT projects by the potential to improve their operational efficiency and release resources to redeploy to front-line service delivery."
The report added, "For example, NHS Direct, by providing health advice online, should release doctors' and nurses' time to treat more serious cases. Departments have very little information, however, on the extent to which such improvements are currently being achieved.
"Departments need to establish reliable baselines against which they should assess and report whether their investment in new technology is achieving the expected benefits.''
The PAC warned that there is a significant danger that even if the Government achieved its target of putting 100% of services online by 2005, people would not necessarily use the electronic channel.
PAC chairman Edward Leigh said services must provide more than basic information to allow the public to carry out transactions with government, such as applying for passports and benefits. He said more has to be done to encourage people to use e-services - especially for the elderly and less well off.
The committee said the UK lags behind Canada, Singapore and the US in the provision of e-services.
It also highlighted the risk that too few companies other than big services suppliers such as EDS and Accenture would bid for government contracts. The report called for projects to be broken up so that small and medium-sized IT companies could bid for government work.
In a separate report entitled E-Revenue, the PAC expressed concern that the Inland Revenue will not meet its target of having all its services available electronically by 2005, with 50% of taxpayers using online systems. In particular, the committee said too few accountants and agents are using the new technology.
The PAC said there are not enough obvious benefits for taxpayers to go online. It urged the Inland Revenue to take action to make electronic services for taxpayers more user-friendly, reliable and, above all, secure.
Leigh said, "There are not enough clear benefits at present for taxpayers to submit their tax returns electronically rather than on paper. In addition, potential users of the Inland Revenue's e-services will not be encouraged to make the switch in the light of the well-publicised initial difficulties of using services and concerns over system security."