  We present a hybrid scheme for quantum computation that combines the modular
structure of elementary building blocks used in the circuit model with the
advantages of a measurement-based approach to quantum computation. We show how
to construct optimal resource states of minimal size to implement elementary
building blocks for encoded quantum computation in a measurement-based way,
including states for error correction and encoded gates. The performance of the
scheme is determined by the quality of the resource states, where within this
error model we find a threshold of the order of 10% local noise per particle
for fault-tolerant quantum computation and quantum communication.
