Salary packages for the company's directors rose just 1% to £2.4m after last year's 40% pay hikes caused political controversy.

Total sales rose 17% to £5.5bn in the year to March 31.

The main draw brought in £4.7bn, boosted by the first full year of the mid-week draw, but sales of Instant scratchcards dropped 9% from £876.5m to £801m.

Contributions to good causes went up 23% to £1.566bn.

Salaries up

Executive directors saw their overall packages rise by between 2% and 19%. But performance related bonuses, based on the previous year's performance, fell 16%, reflecting last year's drop in profits to £70.8m.

Finance director Peter Murphy saw the biggest pay rise, up 19% to £429,000 including a bonus up 7% to £79,000.

Overall, payments to directors and the chairman amounted to £2.34m this year compared with £2.318m the year before.

The salary bill is likely to fall next year because no more payments are being made under the long-term incentive scheme which ended this year.

Instead, staff will be entitled to an extra year's salary if they stay with Camelot until the end of its licence in 2001. The bonus will be based on 2001 salaries.

'Good value'

Finance director Peter Murphy pre-empted any attack on the company's record profits by saying the salary bill represented less than 1p in every pound spent on the lottery.

He also pointed out that money to good causes had surged 23% and the total proportion of money going to the government in lottery duty, tax and the National Lottery Distribution Fund was up 1.5%.

"I think we will always be accused of making too much profit. But at less than 1p in the pound and in the context of the amount of money that's going to the good causes, I think our profits are absolutely reasonable.

"The average amount returned to governments by the top 30 lotteries in the world is 35%. We're returning around 6% more than that - that's £330m more - real money.

Money going to good causes rose 23%

He also said last year Camelot had agreed to pay the equivalent of the directors' long-term incentive payments to charity after the clash with the government but that had closed the issue and was not going to be repeated.

Directors had also agreed to pay undisclosed proportions of their bonuses to charity. Mr Murphy said he would be "very surprised" if directors did not continue to give money to charity, but the amounts would remain private.

TV Dreams 'disappointing'

Chairman Sir George Russell said the sale of TV Dreams scratchcards had been disappointing.

At their peak, £44m-worth of scratchcards were sold a week, a figure which has dropped to around £14m.

Camelot said it would be trying new initiatives to boost sales in the coming months.

Peter Murphy warned that even if successful, it would be difficult for Camelot to keep up profit levels recorded this year because the licence had been structured to channel a greater proportion of money raised towards good causes in later years.

Lottery 'spiritual damage'

The Bishop of Oxford, the Rt Rev Richard Harries, chairman of the Church of England Board for Social Responsibility, told BBC Radio 4's Today programme that the level of profits was not welcome.

He said: "The churches still have the very gravest reservations about the whole lottery enterprise,"he said. "It's not a puritan objection to gambling, to a little flutter.

"It's a national obsession, with big prizes creating a fantasy or myth that people's lives will be dramatically changed.