Tessa Jowell has announced radical changes to the way the national lottery is operated.

Launching a government white paper, the culture secretary put a new emphasis on giving the lottery "back to the people".

"The Lottery needs to change with the times, and we should always encourage innovation and fresh thinking," she said.

She called for the lottery to "lead not follow trends" and become more responsive to people's needs.

"This is the biggest overhaul of the lottery since its inception. Permanent revolution is essential to the lottery's survival," Jowell said.

The secretary of state called for a fresh start so that good causes can continue to benefit from cash grants. To do this, operators will have to tackle the problem of falling sales which will eventually hit funding.

"That simple vicious cycle is the absolute nub of the problem we face," she said.

To fight this the lottery will be ordered to "sell" the game to the people who play it.

"We must explain to the public what the priorities for spending are. With £14 billion raised for good causes its time to show exactly where that money has gone," Jowell said.

Keen to head off claims that the lottery had become a disaster, she highlighted some of the projects that had benefited from the scheme saying without it there would have been "no Eden Project, no Baltic Mill, no Angel of the North and no Commonwealth Games".

In a bid to tackle criticism that too much money has been spent on large projects in London, the paper contained a pledge to direct more money towards the people who buy most tickets.

Seven new forms of funding grants will be created and a single commission will be created to decide how the cash will be distributed.

This will be done by merging the Community and New Opportunity funds and the new body will also get a £500 million fund to provide venture capital for communities that fail to attract finance from traditional sources.

There will also be one new fund for the London Olympic bid and another focusing on grants for young people.

And in a shake-up of the lottery structure, Camelot appears set to lose its monopoly license.

The regulator will be able to offer a range of different licences to run different sections of the lottery - an issue which will raise questions about how the government handled the last round of bidding which Sir Richard Branson lost.

Instead, there will be greater competition for individual games, allowing a variety of different companies and organisations to sell tickets.

Sales have fallen from around £100 million a month five years ago to around £80 million at present.