The coalition has launched a review of public sector bonuses amid anger over payouts at bodies such as Royal Bank of Scotland.

Treasury Chief Secretary Danny Alexander and Cabinet Office minister Francis Maude have written to all government departments asking them to examine their reward structures.

The process is intended to ensure that in future only "genuine excellence" is recognised, after it emerged that up to a quarter of officials automatically qualified for payments.

The move comes as the Government prepares to authorise payouts expected to be worth more than £500 million for bankers at RBS.

A public outcry has already forced chief executive Stephen Hester to waive his £963,000 bonus, while Network Rail bosses also recently gave up entitlements.

Mr Alexander told The Daily Telegraph the review would ensure there was no suggestion of "rewards for failure" in publicly funded bodies.

"The idea is to look at the levers government has, to make sure that the remuneration rules are fit for purpose and command public confidence," he said. "This is not about getting rid of performance pay. It is about making sure that performance pay is there for genuine excellence and not just run-of-the-mill performance."

The process is likely to lead to fewer, smaller bonus payments at bodies with some element of public ownership, such as Channel Four, Royal Mail and the Met Office.

It could potentially also lead to changes at the BBC, which is currently seeking to appoint a director-general to replace Mark Thompson.

The letter states: "The departments will need to apply their own judgment on which bodies to include in the audit but where in doubt, will need to include bodies that are likely to attract public comment."