A SURGE in the profits of the National Lottery operator, Camelot, in the past year saw it making more than #1m a week after tax for the first time.

The figures, published yesterday showed a 14% rise in pre-tax profits to #80.9m for the year to March, producing net profits of #54.2m.

The rise resulted from a 17% surge in lottery sales to #5510m.

Salary packages to lottery bosses rose 1% to #2.4m, compared to last year's controversial 40% pay hikes which caused political uproar.

The massive profit margin was attacked by church leaders, and some politicians called on the Government to ensure that the next lottery franchise went to a non-profit-making body.

However, Camelot said its earnings represent less than 1% of sales, with the bulk of its funds going towards winners' prizes, good causes, and Government coffers.

The company said its profits in the coming year would fall below last year's level due to the structure of its licence, which calls for its take to decrease as sales rise.

Camelot donations to designated ''good causes'' such as charities and community projects rose 23% to #1570m last year, while winners' prizes grew 15% to #2730m.

Despite the fact that the on-line game reaped #4700m, boosted by the first full year of the mid-week draw, sales of Instant scratchcards dropped 9% from #876.5m to #801m.

Publication of Camelot's results last year led to clashes with the Government over allegations of ''fat cat'' pay. However, Ministers were forced to drop demands that directors give up their bonuses amid threats of a mass resignation.

Culture Secretary Chris Smith - who clashed with the directors over their six-figure salaries last year - declined to comment on yesterday's results. A spokesman said the Minister regarded ''the door as closed'' on the subject after the showdown last year and the introduction of the Lottery Bill, which sets out the Government's intentions for the next Lottery Licence.

Although the Government is not insisting the next operator works on a not-for-profit basis, it is seeking a company which does not make ''excessive profits''.

This year, executive directors saw their overall packages rise by between 2% and 19%. However, performance-related bonuses - which are based on the previous year's performance - were down 16%, reflecting last year's drop in profits to #70.8m.

Chief executive Tim Holley's total pay packet rose nearly 8% to #636,000 last year, including his base salary of #284,000. Finance director Peter Murphy saw the biggest pay leap - up around 19% to #429,000 including a bonus up 7% to #79,000.

However, Camelot's overall payments to executives slipped to #2.08m from #2.10m, due in part to two directors' resignations.

Mr Murphy said that not only had money to the good causes surged by 23%, the total proportion of money going to the Government in lottery duty, tax, and the National Lottery Distribution Fund was up 1.5% overall. This was worth an extra #75m alone - representing 50% more than the company's total profits, he said.

He denied that 1997/8 had been an ''annus horribilis'' for Camelot despite a string of controversies over boardroom pay, the scandal surrounding GTech director Guy Snowden's attempt to bribe Richard Branson, and falling Instant sales.

He said flagging weekly scratchcard sales, which have fallen from a peak of #44m to #14m, proved the lottery was not the ''licence to print money'' some critics suggested.

The Rev Ann Allan, convener of the Church of Scotland Board of Social Responsibility, said it still had the ''very gravest reservations'' about the enterprise.

Mrs Allan said: ''The lottery is cultivating a tremendous materialism and greed in this country. I think it is a desperate commentary of our values in society when we can actually see clearly evidence in the lives of all sorts of public people that money doesn't buy you happiness. But yet the lottery still seems to be the national obsession.''

Father Tom Connelly, media spokesman for the Catholic Church in Scotland, condemned the large profit margins as ''obscene'' and said all money should be ''ploughed back into the country to good causes - community projects, eduction and things like that''.

Mr John Maxton, Labour member of the Commons culture, media and sport select committee, called for all money to go to good causes.

However, Camelot's profit figures were praised by Tory MP Tim Collins, secretary of the Conservative backbench culture, media and sport committee, who said the company should be congratulated on a ''job well done for their country, the good causes and their shareholders''.