Libya's interim authorities have stopped paying bonuses to former rebels due to widespread fraud costing millions of Libyan dinars, the official LANA news agency reported on Monday.
"Payment of rewards to rebels has been stopped due to violations and abuses," Mohammed Harizi, spokesman for the ruling National Transitional Council, was quoted as saying.
"Millions of (Libyan) dinars allocated to revolutionaries were lost in (illegitimate) payments to non-beneficiaries," he said, AFP reported.
The interim government had been handing out cash payments of up to 4,000 Libyan dinars ($3,200) to civilians turned fighters who took on the forces of Moamer Kadhafi last year.
But the system -- much like a scheme to finance the treatment of the country's war wounded abroad -- proved vulnerable to false claims.
Violations were referred to the offices of the attorney general and audit bureau for investigation, the spokesman said.
No further payments would be made until distribution mechanisms are revised and the lists of beneficiaries approved by local military councils across the country, Harizi added.
He stressed that the main purpose of the cash scheme was to encourage rebels to join the official institutions of the state and hand in their weapons.
Militiamen angered by non-payment have recently staged small protests in front of the headquarters of the interim authorities in Tripoli and raised checkpoints blocking traffic in some neighbourhoods of the capital.