Britain's Olympic sports face having their funding withdrawn if they fail to meet strict performance targets in the run-up to the London Olympics in 2012.
British Olympic chiefs have set a target of fourth in the 2012 medal table
Former England rugby coach Clive Woodward and BBC athletics commentator Steve Cram will be part of a six-person panel which will assess each sport.
UK Sport's head of performance Peter Keen said: "There is no hiding-place for anyone in the build-up to 2012.
"The key message to sports is that they are funded on merit."
Each sport will be graded green, amber or red according to the progress it is making towards delivering success in 2012.
A sport graded red can have its government lottery funding reduced, suspended or withdrawn, or may have its funding routed through an entirely new governing body.
There is no excuse at all now why our elite athletes cannot be the best in the world
Keen said: "This is about a sense of urgency, about constantly asking what we can do better.
"Right now, I would grade us overall as amber. But if a sport has failed to rise to the challenge, then they will slip out."
Sports minister Richard Caborn backed up the message.
He said: "UK Sport won the argument with the Treasury, and the sports must now respond.
"We've delivered our side of the bargain - now they must deliver on theirs.
"There is no excuse at all now why our elite athletes cannot be the best in the world."
British cycling is held up by UK Sport as an example of how a sport should be run
The move is the latest part of a process designed to take Britain to fourth in the overall medals table at the 2012 Olympics.
The British Olympic Association (BOA) has continued to stick by that target despite serious criticism from within sport.
Britain finished 10th in the medals table at the last Olympics in Athens, while former 110m hurdles world record holder Colin Jackson has said it would take a "miracle" for Britain to win a single track and field gold in 2012.
Cram and Woodward - now director of performance at the British Olympic Association - will also be joined on the panel by Keen and UK Sport's director of elite sport, Liz Nicholl.
They will meet every three months to assess each sport on three areas:
the success of its athleteshow good its elite structure ishow well it is being run
Such is British sport's obsession with London 2012 that the BOA has previously admitted that next year's Olympics in Beijing are being viewed as little more than a staging-post en route to London four years later.
In contrast to the forecast of fourth place in 2012, no medal target has been set by the BOA for Beijing.