Australian Sports Commission (ASC) head John Wylie says introducing an on-line lottery to provide extra funding is crucial if Australia is ever to finish top five on the Olympic medals table again.
Australia finished way below expectations at last month's Rio Games, ending up in 10th spot on the table with eight golds and 29 overall medals.
Australian Olympic Committee (AOC) president John Coates did not even wait until the closing ceremony before savaging the ASC and its Winning Edge funding model of targeting selected sports.
Coates has withdrawn the AOC from an ASC review of the Canberra-based Australian Institute of Sport.
He also said the ASC policy of appointing businessmen such as John Bertrand in swimming and Malcolm Speed in cycling to head up major Olympic sports had been found wanting.
Wylie backed the likes of Bertrand and Speed on Thursday while declining to return fire at Coates.
The ASC board met on Tuesday and committed unanimously to the key principles of Winning Edge.
The ASC will push ahead with its attempts to more closely align the state institutes of sport with the AIS, believing there are significant savings to be made.
Wylie also strongly backed the implementation of an on-line lottery, similar to the one which has helped Britain emerge as an Olympic sporting superpower.
"We're trying to be innovative ... because in global (sports funding terms) we're going backwards," said Wylie.