A report commissioned by the government criticises digital news channel BBC News 24 for failing to set clear "value for money" targets, according to the Financial Times.

The report, led by former Financial Times editor Richard Lambert, said the BBC failed to set clear "value for money" targets the channel, which launched in November 1997.

However, the newspaper also suggested the report highlighted positive aspects of the channel, including current audience numbers.

Viewing figures recently released by the BBC show that in June 2002 3.7 million people a week tuned into News 24 - reportedly giving it about 100,000 more viewers than Sky News.

Tessa Jowell has yet to respond to the findings

And night-time broadcasts of News 24 on BBC One and BBC Two sent the audience figures for the month soaring to average of 10.3 million per week.

This means that one in five viewers in the UK see News 24 output each month, giving the channel a percentage share viewing of 0.5%.

About £50m per year is invested in the channel.

Mr Lambert's findings are thought to be paving the way for a greater analysis of digital TV, prior to the launch of Digital Terrestrial Television (DTT) in the autumn.

DTT is the new 24-channel service led by the BBC and Houston-based transmission company Crown Castle, following the collapse of ITV Digital earlier this year.

'Tighter measures'

Rival news broadcasters, including BSkyB, have said the BBC should not be allowed to divert funds from the licence fee to finance services which receive very few viewers.

The report was sent to the Department for Culture, Media and Sport (DCMS) about a month ago, but has yet to receive a response from Cuture Secretary Tessa Jowell.

However, a DCMS spokesperson said it was considering the report's suggestions, which include calling for the government to draw up tighter performance and scrutiny measures on TV channels.

BBC News 24 executives were unavailable for comment.