The finding, made public by the Government Accountability Office, added to a plethora of big and small ethics scandals besetting the administration and its top Republican allies and putting them on the defensive one year before congressional elections.

The investigation was ordered by Democratic Senators Edward Kennedy and Frank Lautenberg earlier this year, in the wake of reports the Education Department had paid newspaper columnist and television commentator Armstrong Williams thousands of dollars to help promote the No Child Left Behind Law.

The 2002 bipartisan measure established new testing requirements for public schools designed to ensure that students achieve an acceptable level of proficiency in reading and mathematics.

But the law came in for strong criticism from local officials and teachers' unions, who argued it did not provide sufficient funds to implement the reforms.

Under the deal, Williams produced a series of radio and television shows as well as wrote newspaper columns under his own name highlighting what he saw as the benefits of the law.

But in doing so, he failed to disclose the government paid him for these activities 186,000 dollars (150,000 euros) through Ketchum Inc., a public relations firm, according to the GAO report.

"This qualifies as the production or distribution of covert propaganda," said the investigative arm of Congress. "In our view, the department violated the publicity or propaganda prohibition when it issued task orders... without requiring Ketchum to ensure that Mr Williams disclosed to his audiences his relationship with the department."

Newspaper syndicate Tribune Media Services canceled Williams' column in January.

In addition, the department placed with the firm a total of 21 orders for producing unattributed videos showcasing the education initiative that were made to look like normal television reports and were slated for distribution to TV networks as bona fide news stories.

There is no word if any of these clips actually made it to the air.

Congressional investigators pointed out that under US law, "an agency must inform the viewing public that the government is the source of the information disseminated."

The report also suggested the administration may have illegally shifted nearly 38,500 dollars within its budget to pay for its propaganda campaign.

In statements that followed the GAO report, Senator Kennedy and Lautenberg demanded the misused money be returned to the government.

"The taxpayer funded propaganda coming from the White House is another sign of the culture of corruption that pervades the White House and Republican leadership," argued Kennedy.

The finding comes as the Republican establishment in Washington finds itself embroiled in a series of scandals ranging from the indictment of House majority leader Tom DeLay on charges related to his fundraising activities to allegations of preferential treatment of contractors helping victims of Hurricanes Katrina and Rita.

Senate Republican Majority Leader Bill Frist is facing an investigation into a questionable stock sale, while the probe into the illegal disclosure of the name of CIA operative Valerie Plame took a new twist, after it was revealed that Lewis "Scooter" Libby, Vice President Richard Cheney's chief of staff, was one of the sources of information about her.

Plame's name was leaked to the press in 2003 after her husband publicly disputed Bush's claim that Iraq sought to buy uranium ore from Niger as part of its drive to build nuclear weapons.