A spokesman for the National Transitional Council (NTC) said a list of those eligible under the scheme - which paid out 1.8 billion Libyan dinars ($1.4 billion) in less than three months - included people who were dead or who had never fought.

 

"The corruption is too much," NTC spokesman Mohammed Al-Harizy told Reuters on Monday. "Some of the people on the lists aren't even alive."

 

The fighters who took up arms against Gaddafi's security forces were volunteers, grouped together in informal militias, who in most cases were never paid.

 

Earlier this year, the Libyan government announced that it would hand out 4,000 Libyan dinars for married former fighters and 2,200 Libyan dinars ($1,773) for single ex-fighters as a way to support them and honour their bravery.

 

Local military councils were put in charge of administering the funds. They were asked to draw up a list of those who were eligible. Then, based on that list, the central bank allocated funds to the military councils for them to distribute to the ex-fighters.

 

But the NTC spokesman said the lists were flawed and open to abuse. He said that an investigation into the corruption was under way.

 

In some cases, the same names were repeated more than once, allowing a person to claim multiple times, Al-Harizy said.

 

"The government should have created a database with all the names of those who fought, and each fighter should have opened his own account in the bank because then he'd have to show ID," he said.

 

This is the latest government scheme to be halted because it was being abused.

 

Earlier this year the Health Ministry cancelled a programme to give free overseas medical aid to those wounded in the war.

 

The government found that it was footing the bill for airfares, medical and hotel bills for people who were not injured but were able to fake medical statements in return for a government-sponsored holiday.