Jakarta – Indonesia's ruling party Golkar may be barred from campaigning for the June 7 elections after charges that it had used money from an aid programme for its own political gains, a newspaper reported on Monday.

Media Indonesia quoted an official from the election supervisory committee as saying it had received reports that Golkar and another political party, the People's Sovereign Party (PDR), had misused funds from the social safety net.

"If it is proven, then we will sanction them ... The sanction is a prohibition from campaigning during the campaigning period," Ramlan Surbakti, was quoted as saying.

But he added the parties would still be allowed to take part in elections to the 500-member parliament – the first democratic ballot in Indonesia in decades.

Surbakti said the committee did not have the power to disqualify parties from the elections.

A third major party, the Moslem-backed United Development Party (PPP) could also be banned from campaigning after allegations of bribery.

The social safety net programme is aimed at helping Indonesia's poor as the country grapples with its worst economic crisis in decades. The scheme is financed through loans from international donors such as the World Bank.

Golkar, the unbeaten political vehicle of former President Suharto, has been battling to distance itself from the disgraced leader since he resigned in May 1998.