Research published in a magazine, Lottery Monitor, showed that the total fell from £1.7bn in 1997 to £871m in 1988.

Lottery Monitor's publisher and the head of the Arts Council discuss the reason behind the drop in lottery grants

Four local authority areas received no awards at all, four more were only given one award and 27 received just two awards.

But the fall in hand outs can be attributed to changes in the lottery grants system since Labour came to power. Its Millennium Commission has finished handing out all its grants in preparation for the year 2000.

The government also reduced money given by the Arts, Sport, Charities and National Heritage boards to introduce a sixth good cause - the New Opportunities Fund, which has yet to award its first grants.

Complex system

Nevertheless, the size of the decrease has surprised researchers and as applications increase, applicants are becoming frustrated with a system they find too complicated.

The publisher of Lottery Monitor, Alasdair Buchan, said: "It was a year of great change in the lottery in the sense that the government demanded that money should go more to people than to buildings."

This meant big lottery boards like the Arts Council and Sports Council had to cut grants.

"However, the Charities Board managed to give out £80m more than they did in 1997," he told BBC Radio's Today programme.

Peter Hewitt, chief executive of the Arts Council, told the programme that although its grants fell from nearly £300m to little more than £100m last year, grants paid out in 1998 from the three previous years were considerably more than that sum.

"The Arts Council and other disrtributors are very, very concerned to get money out to local level and to local projects. We're all now working hard for 1999 and after to put more money down to the regions," he said.

Regional league table

Lottery Monitor magazine compiled a league table showing how much money went to each local area between 1995, when the National Lottery was set up, and 1998.

Out of all the regions, London was a lottery winner with£172.88 for every resident, while the East Midlands fared worst, receiving a mere £52.96 per head of population.

"Much of this inequality relates back to the huge capital awards made in the early lottery years," said Mr Buchan. "It should also be noted that 13 outer London boroughs are in the bottom half of the table of awards made last year."

The four local council areas which received no Lottery grants during 1998 were:

• Mole Valley, in Surrey
• Christchurch, in Dorset
• The Isles of Scilly
• Tamworth, in the West Midlands

The council areas which received just one award were:

• Ballymoney, in County Antrim, Northern Ireland
• Gosport, in Hampshire
• Runnymede, in Surrey
• Worthing, in West Sussex

In the league tables comparing grants received between 1995 and 1998 the London borough of Westminster came top, scooping £,804.41 per resident, with the City of London second, getting £1,489.29 per head.

North East Derbyshire was bottom with £3.90 per person, below Broadland in Norfolk, which got £5.29 per head.