Celebrity chef George Calombaris has been dumped from a major West Australian tourism campaign after he admitted to underpaying employees at his restaurants by $7.8 million.

Key points: Calombaris has come under fire after underpayment was revealed in his restaurants

Calombaris has come under fire after underpayment was revealed in his restaurants Ads featuring Calombaris spruiking WA had run for the past few weeks

Ads featuring Calombaris spruiking WA had run for the past few weeks WA's Tourism Minister said his conduct was "terrible" and "very disappointing"

Tourism WA, which had a contract with Calombaris to feature in television advertisements and online content to "design your own gourmet escape" in the state, is believed to be the first major sponsor to part ways with the controversial chef since the underpayment scandal broke last week.

The ads had been running for the past few weeks on the eastern seaboard during episodes of the hit television show MasterChef, in which Calombaris features as one of three judges.

Calombaris (centre, with co-hosts Gary Mehigan, left, and Matt Preston, right) is perhaps best-known for his role as a judge on Channel 10's MasterChef. ( AAP: Joe Castro )

WA Tourism Minister Paul Papalia said it was a very disappointing development.

"What George Calombaris has done is terrible," Mr Papalia said.

"People should pay their employees what they're owed and what they deserve, and that's really disappointing."

MasterChef contract to remain

Tourism WA has a separate contract with MasterChef, which has stood by its star, and five episodes of the program were filmed in the west during WA Week from July 1–11.

The "Create Your Own Gourmet Escape in WA" campaign with Calombaris was intended to highlight tourism in Perth and the South West regions, and "encourage visitors to create their own gourmet escape in WA and book a holiday now".

But a spokeswoman for Mr Papalia said the contract with the celebrity chef had been cancelled because of a backlash after his hospitality group backpaid $7.8 million in unpaid wages and superannuation.

The Hellenic Republic restaurant in Brunswick East was one of the restaurants that underpaid its employees from 2011 to 2017. ( ABC News: Ben Knight )

His MAdE Establishment group of companies admitted to underpaying more than 500 current and former employees.

It will also make a $200,000 "contrition payment" under a court-enforceable undertaking made with the Fair Work Ombudsman.

The Melbourne-based hospitality group self-disclosed the underpayment at its Press Club, Gazi and Hellenic Republic restaurants.

Mr Papalia said there were alternative advertisements in the campaign that did not feature Calombaris, which would still run.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 2 minutes 57 seconds 2 m 57 s Fellow Masterchef judge Matt Preston says underpayment of workers is widespread in society

He said the contract with MasterChef was a "good thing" and the Government would be happy to renew it.

His spokeswoman said Tourism WA would seek to recoup part of the cost of the contract from Calombaris.

She would not say how much the contract was worth, citing commercial confidence.