The Morrison government used a $100 million community sports program as a slush fund for its re-election campaign, overlooking projects approved by an independent panel in favour of splashing cash in marginal seats.

A scathing report from the Australian National Audit Office has found Nationals deputy leader Bridget McKenzie, who oversaw the program as sports minister, ignored merit-based recommendations by Sport Australia for almost half the successful projects in favour of seats critical to the government's re-election hopes.

It is the second time the federal government has been warned to lift its performance on the use of taxpayer funds in three months, after a review in November found a $220 million jobs scheme has suffered from conflicts of interest and personal intervention by ministers.

The auditor then savaged the government's management of the sweeping policy to create "jobs and growth" in 10 regions as part of its promise at the 2016 election, with some decisions skewed in favour of Coalition seats.