The weak property market is making it difficult for the Government to sell surplus office space that could save the taxpayer £180 million, the Whitehall spending watchdog has cautioned.
The National Audit Office (NAO) said £830 million could be saved from the Government's estates costs by 2020 as civil service posts are cut and the amount of office space per employee is reduced.
But it warned that the full potential savings were unlikely to be achieved by then because it was difficult to dispose of commercial property leases in the current market. The watchdog said delivering the possible efficiencies required a "step change" in the level of co-operation between different departments.
In a report, auditors praised the "good progress" that had been made in reducing the annual running costs of the civil estate as a whole - including courts and laboratories - by about £100 million a year.
The Government wants to further reduce its office space from 13.2 square metres per person to 10 square metres. The NAO said that would free up more space than all of that in Canary Wharf, with potential savings of £830 million a year.
In June 2010 coalition ministers established the Government Property Unit to oversee efficiencies in the £1.8 billion, five million square metre office estate.
Amyas Morse, head of the National Audit Office, said: "The cost of the total stock of government office property has gone down markedly in recent years. Further substantial progress will require a step change in the way departments work together, involving an end to their managing their estates in isolation.
"The Government Property Unit needs to work to overcome the barriers preventing departments sharing office space, and help Government find ways of using the estate to facilitate wider improvements in how the civil service works."
A Cabinet Office spokesman said: "We are determined to drive out waste and save the taxpayer money, including in the Government's property estate."
He added: "We have moved the Government Property Unit to the Cabinet Office, giving it a prime position to save more taxpayers' money and push through even more innovative ways to co-ordinate property across Whitehall."