Deputy Nationals leader Bridget McKenzie is facing calls to resign amid revelations a Federal Government pre-election cash splash was biased towards seats the Coalition wanted to win.

Key points: The Coledale Waves Soccer Club spent 200 hours preparing a grant application

The Coledale Waves Soccer Club spent 200 hours preparing a grant application It wanted money to improve safety standards and attract more women to the club

It wanted money to improve safety standards and attract more women to the club It missed out on funding and now wants Bridget McKenzie to resign amid bias allegations

A scathing audit report found a disproportionate number of grants were funnelled towards seats then-sports minister Senator McKenzie's office had earmarked as "marginal" and "targeted" before last year's federal election.

The Coledale Waves Soccer Club in regional New South Wales applied for funding to help it attract more women into the sport.

Club member Lisa Miller was among the 10 volunteers that spent 200 hours preparing an application, which was ultimately unsuccessful.

"I can't see how she can't resign," she said.

"It's not acceptable. It shows complete disrespect for all the volunteers across Australia who put in huge amounts of time [applying for grants].

"Your effort is not always rewarded, I understand that, but [it should be] duly considered and not just used for political self-interest purposes - it's not OK."

The Minister is standing firm and rejecting calls for her to resign or be sacked.

"That is absolutely ridiculous," she said.

"This is a highly successful program that's delivering real benefits on the ground to community sporting clubs, so that parents and kids can get out there and get active, adopt a healthy lifestyle, rather than actually having to do fundraising."

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 36 seconds 36 s Bridget McKenzie dismisses calls for her to resign following a scathing audit of sports grants.

Minister defends grants process

The Coledale Waves Soccer Club is within a safe Labor seat in the Illawarra.

Sport Australia received more than 2,000 applications for almost $400 million in Federal Government funding, rolled out over a number of years.

The Government approved more than $100 million in grants in the months leading up to the election.

Ms Miller was initially disappointed her club had missed out on funding but now she is angry, suspecting it was because the club was in a Labor seat.

"It's not acceptable. To me, that's a corrupt process," she said.

"It's a waste of the public servants' time assessing thousands of applications for no end.

"I think it has to be a transparent process ... we have an equal right along with everyone else to be assessed on our merits."

Senator McKenzie has insisted all funding has been distributed within the rules.

"If anything, there's a case of reverse pork-barrelling going on," she said.

"If you look at the intervention that my decisions, as minister, made to the projects that were actually delivered on, originally there was something like 26 per cent of those projects recommended were heading into Labor Party electorates.

"The reality is, thanks to my decision making as minister, 34 per cent of the projects delivered went into Labor Party electorates."

Bridget McKenzie has defended her actions as the sports minister before May's federal election. ( ABC News: Matt Roberts )

Attracting more women to play soccer

Ms Miller said Coledale Waves was one of the largest junior soccer clubs in the region and wanted to expand its women's and girls' programs.

It applied for funds so the grass could be re-levelled, firefighting equipment upgraded and women's changerooms improved.

"We're trying to apply for funding because we attract women and girls to this club," Ms Miller said.

"One of our key strategies is to attract senior women so girls can see that women play soccer. One of the impediments to that is our injury rate.

"Because the ground is so uneven and so hard, compacted and so poorly irrigated we have 30 major injuries a week at this oval in the soccer season.

"My club alone has had about 14 major injuries in the last two years. The women will not register for soccer because the injury rate is too high."

Emma Miles wants better change rooms for her soccer club in Coledale, New South Wales, but it missed out on a grant from the program. ( ABC News: Sarah Moss )

The report into the Community Sports Infrastructure Grant program discovered "evidence of distribution bias in the award of grant funding".

Hundreds of grants were recommended for funding by Sport Australia but were rejected by the Minister, whose office earmarked some seats as "marginal" and "targeted", and funnelled money towards those.

Projects in these electorates applied for 36 per cent of the funding, and received 47 per cent of the amount approved in the first round.

Senator McKenzie, who became the Agriculture Minister after last year's federal election, defended her former department's handling of the grants.

"The ANAO [Australian National Audit Office] report verified that no project that received funding was not eligible to receive it," she said.

"It also confirms that no rules were broken in this program."

Labor wants minister sacked

The auditor-general also recommended Sport Australia address problems of conflict of interest, noting an "undeclared and unmanaged conflict of interest involving a senior Sport Australia employee" with responsibility for the program.

Sports Minister Richard Colbeck said Sport Australia was taking "quick action" to address the concerns outlined in the audit.

Federal Labor has called on Senator McKenzie to quit over her handling of the program.

Labor frontbencher Tony Burke said the Coalition needed to take responsibility, including Prime Minister Scott Morrison.

"You won't find a more explosive report," Mr Burke said.

"Clearly [Senator McKenzie] has got to be stood down. There is not a future for a minster who has done something like this.

"This doesn't just say something about Bridget McKenzie as a minister at the time, this says everything about Scott Morrison.

"I don't think anyone doubts for a minute that she was doing exactly what Scott Morrison wants.

"This bloke views taxpayer money as his personal marketing fund."