Senior US diplomats have praised the efforts of Tony Blair's government to capture the drive and productivity of Britain's emerging technology and internet sectors and help them turn the domestic economy into Europe's top performer, according to documents obtained by the Guardian.

In private dispatches to Washington this year, officials at the US Embassy in London have reported that US firms "have taken notice of how the one-time 'sick man of Europe' is now the economic leader" on the continent".

They added that Britain's hi-tech entrepreneurs have cast off the old "British reserve" and are now imbued with a new "can-do" spirit.

A campaign to increase trade between US and British firms should "go a long way to fulfilling the needs of our new generation of exporters," the Americans wrote.

The officials wrote in June: "As New Labour enters its fourth year in power, the government is taking action to build on the macro-economic success it enjoys in having created the strongest UK economy in more than two decades.

"By introducing new policies and legislation to foster entrepreneurs and the emerging technologies needed to transform the economy, the government intends to increase productivity, and hence UK global competitiveness, far into the 21st century."

In March, the officials had told colleagues in Washington: "The prime minister and the New Labour government have set out to make the UK the economic engine of the EU, with e-commerce and emerging technologies the means to achieve this goal."

The reports underline how the embassy has been working closely with the "highest levels" of the Blair government to encourage American firms to invest in Britain. Ambassador Philip Lader has met chancellor Gordon Brown and trade and industry secretary Stephen Byers several times.

In the spring, a team of embassy officials were tasked to investigate "Britain's second industrial revolution, the change to an information-based economy".

The diplomats reported: "The team criss-crossed 'Silicon Fen', the area surrounding Cambridge, to meet the inventors, entrepreneurs, academics, venture capitalists and officials that have turned this area into Europe's leading area of innovation."

They added that a "rapidly increasing number" of American IT and internet companies were seeking business partners in this "hotbed of cutting-edge technology companies".

The embassy reports were disclosed to the Guardian under the US freedom of information act.

They show that the Americans were pleased with a conference which they organised in March this year on new technologies.

"One event, a panel discussion by local 'start-up' business leaders most of whom are now billionaires, epitomised the switch from the old 'British reserve' to the new 'can-do' approach of UK industry - with US technology and partners."

Despite the diplomatic backslapping, many industry executives are concerned with the latest corporate developments in Britain. Smaller start-ups say provisions for share options in their profit and loss accounts - recommended by the Accounting Standards Board - could cost the industry billions.

The government's controversial regulation of investigatory powers (Rip) bill, which relates to computer communications, was deemed so draconian that companies such as Nokia and Yahoo! warned they might move from British shores.

The chief executive of one UK internet success story said: "What the government has got to stop doing is treating the internet as a photo opportunity and more as a serious commercial prospect."

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Tony Blair pledged to put electronic business at the heart of the British economy. Initiatives included:

•Appointment of Patricia Hewitt as e-commerce minister.

•Working with Oftel to foster competition in telecoms markets and drive down the cost of net access.

•A 100% first year capital allowances for IT investment by small businesses .

•Getting schools online and fostering students' IT skills.

•A national network of online business advisers, helping firms go online.

•The Electronic Communications Act provided for electronic signatures to be admissible as evidence in legal proceedings.