The Commons public accounts committee has condemned an "astonishing" error that led to a tenfold increase in the cost of relocating GCHQ.

By the mid-1990s Britain's secretive eavesdropping centre had outgrown its cold war era facilities in Cheltenham, and managers decided to move to new purpose built accommodation.

As well as criticising the way in which aspects of this PFI project was handled, the MPs also slammed senior managers for failing to properly plan for the work involved in transferring its technical capability into the new building.

GCHQ decided to handle this element of the move itself for security reasons.

But between 1997 and 1999 the cost estimates for this transition rose from £41m to £450m.

The Treasury refused to fund that in full, committing GCHQ to a staged handover that means some of the buildings at the old site will have to be kept open, leading in turn to higher running costs.

The committee found that "in this case, which obviously was bound to involve a major technological move, GCHQ continued to perceive it as a building project for far too long".

It concluded that GCHQ experts failed to spot that development of IT networking during the 1990s would hugely complicate technical transition, which effectively evolved into a major systems upgrade.

The GCHQ Board was principally concerned with the feasibility of testing the PFI market for a new building and lost track of the scope and cost of the technical transition.

"It is astonishing that GCHQ did not realise the extent of what would be involved much sooner, given how critical these systems are to its core business," said committee chairman Edward Leigh.

He also condemned the handling of the PFI contract.

"Between selecting IAS as the preferred bidder and signing the contract, costs rose by £85 million on the PFI deal for the building.

"Departments should settle key requirements and negotiate prices before selecting a preferred bidder otherwise the contractor will always have the upper hand, and the taxpayer will lose out," he said.

The MPs also found that up to 250 workers will continue to be stationed at the old location indefinitely because the new building is too small to accommodate all staff.