Britain's official data gatherer has admitted that it needs to do more work to fully get to grips with the way consumers spend money over the internet - and has identified at least four specific areas that require its "additional investigation".

In an 18-page analysis of recent trends in internet spending - and how it can properly be measured - the Office for National Statistics identified online gambling, subscriptions to gaming organisations, software downloads and internet purchases from abroad as areas not sufficiently "captured" in official trade data in the UK.

"Although coverage of internet spending is good, there are some areas where future work is needed," ONS said as it introduced its analysis, entitled Internet spending: measurement and recent trends.

ONS, whose most recent estimate puts annual internet spending at £18.1 billion in 2004 - said it had concluded that "most internet spending is captured in the National Accounts, but ... that it cannot always be identified as a separate component, especially in monthly data".

Although its carefully watched monthly retail sales index, for example, does incorporate internet transactions by Britain's retailers, the figures are not stripped out separately but form part of a wider category.

With more than 55 per cent of households having access to the internet at home as at July last year, internet shopping is growing dramatically and today's admission by ONS suggests that internet spending could actually be much higher than its current estimates.

As ONS said itself today: "The internet is not only an expanding channel for household and business spending, but it is also a driver for productivity growth."

Chris Lake, who runs e-consultancy.com, which advises companies on their internet strategies, said internet spending in the UK could have risen to as much as £30 billion last year, even assuming the market has grown at the same rate as in 2004, when usage soared by 67 per cent.

"I suspect that it has increased beyond that, maybe even doubled, though it is hard to say with any degree of accuracy. Tesco is likely to have processed at least £1bn of online sales in 2004-5. That's just one company, albeit a big one. £30bn is looking rather conservative, come to think of it," Mr Lake told Times Online.

He added: "The ONS is being admirably transparent about the difficulties it faces in collating this data, from retailers - who do not separate internet sales from offline sales - and other sources. Nevertheless, the bigger picture remains out of focus."

ONS said that more than half of household expenditure carried out on the internet was accounted for by wholesale, retail, catering and travel as a broad industrial group.

With these areas accounting for £10.7 billion of the £18.1 billion of estimated internet sales in 2004, £59 out of every £100 spent by households over the internet is spent on these items.

Although internet sales still account for a small portion - about 2.5 per cent - of total consumer spending, ONS has been expanding the scope of its indices such as the Consumer Prices Index and the Retail Sales Index to take account of the increase in web usage.

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