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 optima
l 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.
