The Northern Ireland Executive is underspending its budget by about �1m a day, it is understood.

Finance Minister Sean Farren is currently preparing a report on underspending which is due to be released in the autumn.

Local politicians frequently ask for more money to address the many problems in Northern Ireland, so the revelation will cause significant embarrassment.

Sean Farren: Preparing a report

One ministerial source blamed inefficiency by officials and expressed fear that the Treasury in London would note the underspending and prove less generous to Northern Ireland in future spending reviews.

On Thursday, the executive discussed the funding of specific projects from the package announced by Chancellor Gordon Brown and Tony Blair when they visited Belfast in May.

One project certain to receive funding is the new cancer centre in Belfast.

The details will be announced next week, but it is believed the health sector will receive about �110m from the initial tranche of what is known as the Reinvestment and Reform initiative.