The McGowan Government faces a year-long parliamentary inquiry into its 'Local Projects, Local Jobs' grant scheme after losing a vote in the state's upper house yesterday.

The scheme was a key part of Labor's target-seat election campaigns before the 2017 election and has come under opposition fire when it was revealed the money was spent almost entirely in Labor-held seats.

The McGowan Government's "Local Projects, Local Jobs" grants fund will put through the ringer in a parliamentary inquiry after it was revealed it had been spent in Labor electorates. Credit:Dan Peled

Opposition government accountability spokesman Tjorn Sibma told Parliament the program had ballooned from $22 million to $40 million since the election "at a time of so-called budget repair".

"From my calculation, it is probably equivalent to the savings or the cuts to the education portfolio," he said.