A Liberal MP handed a $1.5m novelty cheque to a local sports club while the deputy prime minister was privately warning it not to spend the money because it was yet to go through due diligence and final approval.

Late last month, Liberal MP Jason Wood handed over a $1.5m cheque to the Berwick Football and Netball Club in his marginal seat of La Trobe, snapping photos with happy children and staff and posting the news to Facebook, writing “Delivered $1.5m.”

The deputy prime minister, Michael McCormack, wrote to the club about the same time to congratulate them and confirm the funding commitment of “up to $1.5m”. But he also warned them not to spend the money or begin any work.

The letter, obtained by Guardian Australia, said this was because the grant was contingent on “final due diligence” and final agreement.

“Whilst this letter confirms the commitment to your project, funding of $1.5 million is contingent upon the execution of a Deed of Agreement,” McCormack wrote.

“I recommend that you do not enter into financial commitments or begin work on the project until such time a Deed of Agreement has been signed with the Australian government.”

McCormack also asked the club to keep his letter confidential.

Wood holds the marginal Victorian seat of La Trobe, and faces a tough battle to keep it for the Liberals in next month’s federal election.

The money was to be given to the club through the Community Development Grants Programme (CDGP), which aims to fund long term improvements to the social and economic viability of communities.

It is not unusual for political parties to make funding commitments to local groups, and then later have them funded through grants programs such as the CDGP.

Money was doled out using the CDGP in a similar fashion during the 2013 and 2016 election campaigns, and the auditor general last year largely found no problems with the way the program was run. The audit did, however, find that some projects that had been promised money in the lead-up to election were later found to be ineligible for the grant program.

A spokesman for McCormack said the funding for the Berwick club was in the budget and ready to be spent. He said the process followed was no different to other commitments made by the CDGP.

“The deputy prime minister’s letter confirmed the funding and outlined the Community Development Grants Programme guidelines,” he said.

“Since this time, the relevant department has contacted the club and commenced the process of finalising a funding agreement with the club.”

But Labor is concerned about the way Wood announced the money – using the cheque and claiming the funding had been “delivered” and “secured”, when it had not yet been approved.

Labor MP and shadow regional services minister, Stephen Jones, said the commitments were worthless.

“The government has sent these letters out to countless community organisations promising millions,” he said. “These promises can be reduced to one sentence: The Coalition commitment to you is as reliable as the fake cheque it is written on.”

Wood has been approached for comment but did not respond.

Both Labor and the Liberals have come under scrutiny for handing over novelty cheques and taking credit for yet-to-be-awarded grants in the lead-up to the election campaign.

Liberal candidate for Mayo, Georgina Downer, drew criticism for handing a novelty cheque to Yankalilla Bowling Club in South Australia last month.

The auditor-general has agreed to examine the grants program that funded the Yankalilla project.