The government's decision to give £4.2m to a charity that was created with the help of its big society adviser, Lord Wei, raises "serious ethics and transparency questions", according to the shadow civil society minister, Roberta Blackman-Woods.
The Challenge Network was among 12 organisations selected to run pilot schemes for the National Citizen Service programme, which have been awarded £15m in total. The next highest award was £2.1m to the young people's charity Catch 22.
Blackman-Woods said it was not wise for the government to give an extremely large grant to an organisation set up by an adviser on the policy concerned.
"I will be asking ministers some serious questions about this matter to ensure that the allocation of money to this organisation is fully transparent and in line with the aims and objectives of the National Citizen Service," she said. "It is imperative that all allocations of finance can stand up to public scrutiny."
The Challenge Network, a young people's civic engagement charity, was set up two years ago by the Shaftesbury Partnership, a social business of which Wei is a founding partner.
It was registered as a charity in April 2009 and its 2009/10 income was £1.2m. The Prime Minister, David Cameron, launched the network's challenge scheme in March 2009 and referred to it when he announced the pilots in July this year.
The pilot schemes will recruit 11,000 school-leavers to carry out physical challenges and community work over seven or eight weeks.
A network spokeswoman said its success was due to "the strength of our programme and track record".
A Cabinet Office spokesman said the selection process was based on fair and open competition and that neither Wei nor ministers were involved in the process.
BIG SOCIETY'S CHARITY ARM
The Big Society Network, which was co-founded by Lord Wei and launched by David Cameron, is to form a charity called the Society Network. It will be led by Paul Twivy, the chief executive of the BSN, and Wei will be invited to sit on the board as honorary co-founder. A trading arm, called the Big Society Network Ltd, is also being established.