The Auditor-General has warned the Morrison government to lift its performance on the use of taxpayer funds after a scathing inquiry into a $220 million jobs scheme which found it suffered from conflicts of interest and intervention by ministers.

The auditor savaged the government's management of the sweeping policy to create "jobs and growth" in ten regions as part of a Coalition promise at the 2016 election, with some decisions skewed in favour of Coalition seats.

The government's regional jobs and investment program has been savaged by the Auditor-General. Credit:Louie Douvis

The problems led the auditor to issue a rare alert to all federal agencies to guard against failures in the use of contractors and the handling of conflicts of interest in future grants.

Government officials recommended hundreds of applications for regional job programs but were overruled by a ministerial panel which rejected 64 projects seeking $75.9 million.