A quango established to distribute lottery cash to the Olympics has run up almost £600,000 in staff costs in the past year despite making only two grants, accounts reveal.

Six staff at the Olympic Lottery Distributor were paid on average £100,000 each, with chief executive Mike O'Connor receiving a package worth £176,000, including a bonus of £16,000.

Disclosures come a day after it was revealed that Olympics chiefs have paid £100m to construction programme consultants CLM and have led to claims that there is a burgeoning industry in scrutinising the 2012 project.

Annual accounts for OLD for 2007-08 show payroll costs of £556,878 for six staff, including the chief executive and two other senior staff members.

During the past year the OLD made just two grants - to the Olympic Delivery Authority for £1.4 billion towards Park construction costs and £2.6 million to the Games organising committee, Locog, towards setting up "live sites" across the UK to host the "cultural Olympiad" which starts later this year.

Liberal Democrat Olympics spokesman Don Foster called for the OLD to be abolished. He said: "It beggars belief that we're paying an enormous amount of money for yet another Olympic body which seems to do little more than hold the purse strings.

"With the 2012 budget stretched to the limit, and so many other bodies already scrutinising expenditure, the Government must look at getting rid of this type of unnecessary expenditure. It's quite clear that there are a number of other lottery distributors who would be more than competent at carrying out this job for a fraction of the price."

But Mr O'Connor said: "If something goes wrong questions will be asked of me in parliament. The funds we control account for 20 per cent of the budget."

He added that the OLD's running costs come from interest on reserves and they were less as a proportion of the budget under OLD control than other distributors. He said the OLDscrutinisedspending of lottery cash and not just rubber-stamped grants.

Final approval for lottery grants is given by the OLD board whose members include International Olympic Committee member Sir Craig Reedie and David Ross, the Carphone Warehouse tycoon acting as Olympics advisor to Boris Johnson. Board members receive £200 per meeting.

The OLD was established in July 2005 to approve lottery grants towards 2012 projects. Its pool of lottery cash has been boosted to £2.2bn after the Government raided the lottery a second time last year to boost the budget.

Much of the funding comes from dedicated scratchcard Games which have so far raised around £300m.

Earlier this week the Olympic Delivery Authority was criticised for paying £1.7m in bonuses to staff over the past year. Around £500,000 in performancerelated pay was shared among seven directors in addition to inflationbusting salary increases. Chief executive David Higgins received annual remuneration totalling £624,000.