GCHQ has been assessed as world class in a Government report.

The Cabinet Office, the Whitehall department which runs the civil service, has published its first capability review of the intelligence organisation based in Cheltenham.

And its report says: "Customers and partners speak of a world class, and in some specific cases, unique capability in GCHQ's delivery of signals intelligence.

"They recognise GCHQ's rapid and very effective responses to emergency and crisis situations."

The staff at the Doughnut in Benhall and its outstations are also praised by the report.

It said: "GCHQ's purpose and vision is clear.

"The department has a wealth of talented and highly capable people who are proud to work for their organisation and are passionate about its mission."

But the assessment is not without its criticisms.

Senior management, it says, should become more visible to both staff and GCHQ's customers and need to work together better to drive the changes needed to meet challenges like technological changes.

The report also says that staff are frustrated by bureaucratic complexity and layers of management which hamper decision-making and it criticised the personnel strategy, both in terms of workforce planning and because the department is not meeting its targets for women and ethnic minorities in senior management

Cabinet Secretary Sir Gus O'Donnell, Britain's top civil servant, said: "This report is just the beginning. The real challenge for GCHQ comes in implementing the changes that have been identified. I will hold the director to account on the department's progress.

GCHQ director Iain Lobban was responsible for asking for the review and report to be made.

He said: "There's a risk for an organisation like GCHQ, whose work needs to be kept secret but which needs to remain at the cutting edge of technology, that it becomes insular and impervious to best practice from elsewhere in the public or private sectors.

"Shortly after I became director I asked the Cabinet Secretary to sponsor a Capability Review of GCHQ, which has now concluded. We gave the review team full access to GCHQ staff and to classified papers, but I am pleased that they have been able to write their report in a way which means that it can be published alongside other departments' reviews.

"There's a very positive endorsement from the review of much of what GCHQ is currently doing, including 'world class signals intelligence activity'. But there are also some important messages about areas we need to address in order to do better. I fully accept those and I'm determined to make progress and improve our performance further for the re-review in 2011."