His criticism followed the distribution of pounds 159m to more than 2,000 projects by the lottery's Charities Board. Although beneficiaries included institutions such as the Red Cross, the Samaritans and the Prince's Trust, more controversial schemes were also helped.
Among those highlighted by Downing Street were the West Midlands Anti- Deportation Campaign, which received pounds 66,000; the Leicester Lesbian, Gay and Bi-Sexual Centre, which received pounds 50,000; the Gay London Policing Group, pounds 26,000; and the Scottish Prostitutes Education Project, which received pounds 82,000.
Mr Major told the Commons that while he welcomed the grants to charities, a minority were inappropriate. "A small number do not in my judgement reflect the way Parliament and the public expected lottery money to be spent."
The grants were based on the theme of youth and poverty, and the biggest went to a homeless project in Bradford, West Yorkshire, which received pounds 609,900. The Big Issue magazine, sold by homeless people, received pounds 140,373, and the smallest grant included pounds 500 to the Tong Recreation Association, on the Isle of Lewis.
The Charities Board defended the more controversial projects to receive grants on the basis they were picked on merit, not popularity. It said projects for gay people, lesbians and deportees accounted for less than 1 per cent of the total.
David Sieff, chairman of the board, said: "We must by law consider all applications we receive on merit. All groups offered grants submitted excellent applications to the board, which were assessed thoroughly against their criteria."
The grants were brought to the attention of Downing Street by Virginia Bottomley, the Secretary of State for Heritage, who has asked Mr Sieff for a written report on the choices, including The Gay London Policing Group, which works with victims of homophobic attacks, and aims to improve police attitudes. Its grant was to fund a youth worker.
Fen Coles, a project worker for the group, said: "We're disappointed the Government has reacted in this way. They seem to be saying some groups are of a higher priority than others when it comes to receiving National Lottery money."