The council, which distributes government and lottery funds to the arts, was attacked in a recent National Audit Office review for giving money to schemes which went over-budget or were not finished on time.

Chief executive Peter Hewitt said it would be showing "more of a sense of investment in talent and winners".

Council member and sculptor Anthony Gormley - the man behind the Angel of The North monument at Gateshead - said: "I think there has been a lot of fossil polishing in the traditional Arts Council's responsibility towards its clients.

"We are in the process of transforming this into a truly creative institution."

Revamp by new chairman

Anthony Gormley: Against "fossil polishing"

The body has undergone a revamp following the appointment of chairman Gerry Robinson - who also runs media and leisure group Granada - a year ago.

Staff numbers have been cut by a third at the organisation, and much of its work is now to be carried out by regional arts boards.

Gormley insisted institutions such as the Royal Opera house, Royal Shakespeare Company and the Royal National Theatre would be neglected, because they were the the "bedrock" of arts in the UK, Gormley said.

But he added: "Changes will have to be made in the amount of the bedrock, because funds are limited."

One of the "bedrock" institutions, the Royal Opera House, took a �78m Lottery grant to help rebuild its theatre in Covent Gardent.

But the Opera House still needed bailing out, even though it already received �15m a year from the council.

Other Arts Council members denied they were simply following government policies.

Money for experimental works

Deborah Bull: Member of the Arts Council

Dancer Deborah Bull said: "I think it is foolish to pretend that we can't have an adult relationship with Whitehall, but that doesn't mean to say we are necessarily in bed together."

The strategy involves �20m over three years which will go into experimental work, cross-artform activities such as new technology, socially diverse work, work with children and young people, and touring and distribution.

A further �10m-a-year in lottery funds will go into national touring projects in a range of art forms, while �3m-a-year of lottery money will go into a new scheme for publications, recordings and distribution, and will help raise the profile of the arts on the Internet.

Meanwhile, �57m will go into a stabilisation programme over the next three years to help arts organisations improve their finances.

The council also has �430m of Lottery money available to spend on building and other capital schemes over the next seven years.