A former employee of GTech Holdings says the US firm knew a computer software glitch was short-changing some British lottery winners but held off telling the operator, Camelot Group. GTech supplies equipment and retail terminals to the National Lottery.

Britain's independent National Lottery Commission (NLC) said last Saturday the defect caused computers to think there were more winners than there actually were, diluting the prize pool.

The BBC, previewing a report by its Weekend Watchdog programme, said yesterday that Mr David Armitage found the fault but was told by his managers that nothing would be said.

"In July 1998, I discovered that phantom tickets were being sent up from terminals and being logged on the central computer system of the National Lottery," he told the BBC.

"All I can say is that on every day I looked, there were hundreds of phantom tickets recorded on the central computer system and the phantom tickets had definitely won prizes."

Mr Steve White, a GTech spokesman, said his company was aware of the claim. "We have been informed that an allegation has been made about an alleged software fault in the UK Lottery, which was identified in June 1998. We are co-operating fully with Camelot and the National Lottery Commission in their investigations. We are not in a position to comment further until the NLC has completed its investigation," he said.

The lottery commission said the prizes in question, from tickets sold between 1994 and 1998, were all under £50,000 sterling (€79,948) and that no one entitled had missed out on a prize.

After working with Camelot and GTech, it said the glitch no longer existed and had limited effect. All transactions are being examined so that any amounts due to retailers and small winners will be met in full.