The granting of public money to rebuild Wembley stadium was a good example of risk-taking, according to the National Audit Office.
The government calculated the risks in backing the stadium
The spending watchdog looked at the handling of £161m of public money given towards the estimated £757m total cost of the new stadium.
In particular it examined the government decision to continue supporting the project after it ran into financial trouble in 2001.
It said the decision was "an example of well-managed risk-taking".
The Wembley project began with a gamble when Sport England granted it £120m lottery cash - its largest ever handout - the report said.
The project, run by a subsidiary of the Football Association, then ran into financial trouble in 2001 when the FA failed to secure the commercial funding needed.
Tessa Jowell's department is being urged to stay on the ball
The FA asked the Department for Culture, Media and Sport to rescue the stadium with extra funding.
The department carried out an extensive review before deciding whether to put in more taxpayers' money, or scrap the project and try to get the money back, said the report.
In 2002, the department concluded the project was worthy of further support. The stadium then received £20m from the department and £21m from the London Development Agency.
The head of the National Audit Offfice Sir John Bourn praised the department's "thorough review" of the options and risks involved.
The decision to provide additional public funding for the English national stadium project at Wembley is an example of well-managed risk taking
"The road to Wembley has not been easy and the department found itself in a difficult position in 2001," he said.
"I welcome the action that has since been taken to review the project and protect the public interest."
He warned ministers to continue to monitor the project to make sure it was a success, and to act promptly if there were concerns.
The report added that a decision in 1999 - later reversed - to take athletics out of the stadium project
had not been well handled.
Tory MP Edward Leigh, who chairs the Commons Public Accounts Committee, also praised the way the department had handled Wembley's shaky start.
The government in 2001 was "dealing with a troubled project without sufficient financing, with
the risk that millions of pounds of lottery money might be wasted", he said.
The old Wembley Stadium is currently being demolished
"This report focuses on what has been done to recover the
situation and shows that the new arrangements leave the project in substantially
The aim of the Wembley project is to develop a national stadium for football and rugby, which could also stage major international athletics events.
The stadium is meant to become financially viable in its own right, without the need for ongoing public subsidy - any profits will be used by the Football Association for the benefit of football.
The stadium is due to be completed in early 2006.