The powerful quango has published a report that claims prefabrication is four times as efficient in its use of labour as traditional construction.
This suggests, the report says, that widespread use could go a long way to easing the shortage of affordable housing in the South East.
The research - which was commissioned by the ODPM - backs much of government policy on the use of so-called Modern Methods of Construction.
The document, however, is not without its reservations about the contentious building system.
The NAO found that the system faces risks caused by unpredictable planning decisions and the availability of off-site manufacturing capacity. To mitigate these problems, the report calls for a greater emphasis on 'up-front planning'.
But in large part the report will be welcomed by those in the prefab industry.
The NAO's John Bourn said on Friday: 'Modern construction methods can produce important benefits for housing authorities and developers, not the least of which is the reduced emphasis on on-site activity.
'This is particularly important in a time of increasing demands on an already stretched labour force.
'As with any new way of doing things there are risks, but these can be mitigated through good project planning and management,' Bourn added.