Secretary of state Tessa Jowell made the comments in a letter to BBC chairman Gavyn Davies, following the publication of a review into the service by former Financial Times editor Robert Lambert.
Lambert looked at how the channel was performing and how it can be improved as part of the independent report, which is the first in a series of Department of Culture, Media & Sport reviews of the BBC's digital services.
Jowell said that although the report concludes that the service's performance is satisfactory, she said there was considerable room for improvement.
Lambert recommended that the governors provide the service with a clear sense of direction through a revised remit, to ensure its distinction from its competitors, which include Sky News and ITV News.
Jowell said in her letter that some of the recommendations have already been addressed by the BBC in its recently published statements of programme policy. However, she went on to say that the policy should be reviewed following Lambert's report.
"I believe the governors should now revisit the commitments given in the News 24 statement of programme policy, in the light of the Richard Lambert report," Jowell said.
The letter added that Jowell was "minded to impose a further condition requiring the governors to report more fully on the delivery of News 24 in the BBC's annual reports". This would include "more detail on the cost of the service than has appeared in the BBC's annual report up to now".
The BBC, which has until February 2003 to respond to the report and until the end of April to disclose how it will meet this condition, said it welcomed the findings of the review.
Richard Sambrook, director of BBC News, said: "We are very pleased by Richard Lambert's support for News 24 and we welcome his suggestions for improvement."
However, the BBC said in a statement that it believes it is more open and accountable than any of its competitors. It said that its governors would look at how the channel can provide greater financial transparency.
"We believe that the channel still has great potential for growth and innovation and it has always been our ambition to develop the channel further to meet the audience need for BBC News around the clock."
News 24 and Sky News attract the same share of the TV audience at 0.6% each, according to recent figures from the Independent Television Commission.
The BBC said that News 24 is increasingly demonstrating its value to licence payers and its latest viewing figures show that the channel gets a weekly audience of 3.6m in all multichannel homes.
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