Fiji's military government has demanded the resignation of the board and executives of the Fiji Rugby Union over alleged mismanagement of a lottery intended to fund the nation's participation at the World Cup in September.

Sports Minister Filipe Bole said the government would put $FJ3 million ($A1.61 million) toward the Fiji team's Cup preparation but only if the current union administration was replaced.

Bole made his comments at a news conference after Fiji's Commerce Commission revealed the findings of its investigation into the union's handling of the lottery.

Commission chairman Dr Mahendra Reddy said the investigation showed discrepancies and irregularities in tickets sales and returns, and that some lottery funds had been used for purposes other than those advertised.

He said that of the 100,000 tickets printed, only 47,591 had been accounted for. And based on the number of tickets sold, there should have been $FJ350,000 ($A208,000) in the lottery account, but the balance was only $FJ105,000 ($A62,250).

Reddy alleged that funds had been used to pay for the trip of a senior lottery director to last year's Hong Kong Sevens tournament.

"We simply cannot overlook issues and allegations of fraud, mismanagement, deceptive conduct and criminal liability because we Fijians love rugby and support our Fijian team in the upcoming IRB World Cup," Bole said.

"I have also asked the International Rugby Board for assistance by providing personnel to help manage the (FRU)."

At a special union meeting on Tuesday, union chairman Bill Gavoka stepped down and was replaced by Rafaele Kasibulu.

The union resolved to open discussions with the government through Kasibulu, who will act as interim chairman until an election can be held.

Gavoka told Fijian media before resigning that the board was elected by Fiji's Council of Rugby and that was the only body with the power to dismiss members.

"Fiji Rugby Union finances are audited each year and tabled at the AGM. It is transparent and available to anyone to see," he said.

"This is very dangerous as the IRB will not entertain the intervention of any government into the affairs of rugby in any country."

Gavoka said he was surprised at Bole's offer of funding for the Fiji team as an inducement to board members to resign.

"The government had indicated to us in writing that while they support Fiji's participation at the World Cup, they could not provide financial assistance towards the preparation of the team," he said.

"Where did this $3 million being dangled before us come from?"

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