GOLD medals glistening around their necks, Britain's athletes are celebrating their most successful Olympics for 88 years.

The ignominy of Atlanta and a solitary gold four years ago was forgotten as Team GB returned triumphant with 11 golds, ten silvers and seven bronzes.

And for many of the athletes themselves the key difference between performances in Atlanta and Sydney was lottery funding.

The last five years have seen about £63m of lottery money injected into sport, divided between community projects and elite athletes.

Rower Matthew Pinsent, who won his third gold in the coxless fours alongside Steve Redgrave, was in no doubt that cash to enable athletes to prepare properly was the key to this year's success.

"Never again should we send a team to the Olympic Games with one arm behind its back as we did in Atlanta," he says. "It doesn't matter whether the money comes from National Lottery, the British Olympic Association or direct sponsorship, it has to be found.

"We were a bit worried that our funding was going to be cut and if, in six months time, that proves to be the case then we can say goodbye to any more success in Athens."

Culture Secretary Chris Smith was swift last week to promise that sport would keep its share of lottery funding. But sport is just one of six good causes to benefit from the creation of the National Lottery.

For every £1 spent on the lottery, 50p goes in prize money, 12p to the taxman, 5p to the retailer, 5p to lottery operator Camelot and the remainder, 28p goes to the good causes.

Of that 28p, 4.7p goes to each of the four original good causes of sport, the arts, heritage and charity.

Another 5.4p goes to the Millennium Commission, for projects to mark the year 2000, and 3.8p to the New Opportunities Fund, which supports health, environment and education schemes.

Out of the £9.3bn distributed to the good causes so far, about £407m has come to the North-East and another £514m to Yorkshire and Humberside.

According to lottery operator Camelot, about 30 million people play the lottery regularly, representing about 65 per cent of the adult population. A spokeswoman says sales, including tickets for the weekly draw and scratchcards, are up 3.9 per cent on last year and they are on target to raise £10bn for good causes by the time their licence expires next September, £1bn more than first forecast.

Total sales of tickets and scratchcards last week were £96,717,468, adding another £26m to the total for good causes.

The National Lottery Charities Board has about £270m to hand out each year, with each region getting its share according to population, weighted to take account of levels of deprivation. This year the North-East will get £15m of that, with grants submitted to the board's Newcastle office, a short walk from the Central Station.

North-East regional manager Peter Deans says bids for cash are assessed on a scoring system, looking at whether they are financially sound, well managed, properly planned and whether they will deliver value for money. And the final decisions are made by a 13-strong panel of people who live and work in the region. The majority of the panel has an interest and experience in charity work but the board also selects two members at random.

Mr Deans says: "We pick an area of the region where we haven't had somebody for a while and then use the lottery bonus ball to give us a number on the electoral roll. We then write to these people and ask if they're interested and if they are we invite them along for an interview."

Interviews for the latest board members, all picked from Easington in County Durham, will be held soon.

One of the board's biggest grants has been the £600,000 to St Chad's family centre in Gateshead but most grants are less than £5,000.

"We make good grants and we do it fairly," says Mr Deans. "We have funded some absolutely excellent projects in this region that would never have happened if we hadn't been here. We have to make agonising choices and we have a meeting tomorrow to look at the next batch of applications. We have to take risks sometimes and there are some projects that haven't gone according to plan but the vast majority are successful."

Cash for sports is distributed by Sport England, with 75 per cent going to community projects and 25 per cent for world class performers, with a total of £61m handed out in the North-East over the past five years.

All sporting grants are made by a national panel based in London, with members appointed by Chris Smith.

And one of its major projects in the North-East is the creation of the English Institute of Sport at Gateshead, a £10m centre to offer expert help, from physiotherapy to dietary advice, to athletes.

The Heritage Lottery Fund has given grants of about £59m to 232 projects in the North-East, ranging from protecting listed buildings to supporting oral history initiatives. Decisions are made by a regional committee, with representatives from all over the UK.

But from next year a new North-East committee will be established to bring the decision-making closer to home. "We needed to make sure that our grant making was able to take account of the needs of the regions themselves and we felt that would be done most effectively by people in the region," according to Tim Wilson, the fund's North-East manager.

Advertisements were placed in newspapers last month to attract members of the new committee, which will come into operation from next April.

"We're looking for people with experience and an interest in heritage, perhaps working in that sector and understanding the pressures," Mr Wilson says. "These people are going to be making very important decisions involving not just a lot of money but also people's dreams."

For Olympic athletes, decisions on funding could mean the difference between gold and being an also-ran. But the humblest community project is still somebody's dream - and in the lottery race is still in with a shout.