Half the country's over 65s do not use the internet, threatening to create a digital "them and us" as the Government increasingly moves services online, the Whitehall spending watchdog warned.
The National Audit Office said the Government must do more to help people who struggle to use the internet if its "digital by default" strategy is to be effective.
A survey of 3,000 people in England conducted by the NAO found one in six (17%) were not online - rising to 49% among those aged 65 or over.
Internet use was also markedly lower among social class 2CDE with a quarter (26%) "offline", compared to just one in 10 (9%) among ABC1s.
Even among those people who are online, the NAO said there were "challenges" in persuading them to use public services on the internet.
The Government is trying to make public services "digital by default" - where they are so straightforward and convenient that all those who can will choose to go online, while those who cannot will not be excluded.
However the NAO found only 37% were happy to share information with the Government online, there was "low public awareness" of some online services, while some people simply preferred face-to-face contact even if they could use the internet.
"There is far to go before digital becomes everyone's chosen means of accessing public services. There are still significant numbers of people who cannot, or do not wish to, go online," the NAO said. "The Government has set out plans to help such people use digital channels but now needs to put these plans into action if it is not to create a 'them and us' problem for those not online."
Cabinet Office minister Francis Maude said the Government is committed to providing people with the support they need to go online.
"Putting these services online, rather than using face-to-face, postal or phone options, will deliver substantial savings to the public purse, and save users time and money," he said. "We are developing digital services that are so good people will prefer to use them, while ensuring that those who are not able to go online are given the support they need to do so."