The U.S. government plans to accelerate the pace of processing up to $3 billion in cash for clunkers reimbursements to auto dealers and hopes to complete the job by month's end, officials said on Thursday.

Dealers, through their main trade group, have complained the Transportation Department's online processing system was cumbersome to use and too slow to respond to some 700,000 rebate applications between the first week of July and the third week of August when funding was nearly exhausted.

Most of the 3,000 people involved in processing are contractors, and government officials have acknowledged computer system breakdowns and other problems handling the avalanche of applications from 16,000 dealers.

The government offered consumers up to $4,500 when they traded in older gas guzzlers for more fuel efficient vehicles. The incentive was far more popular than expected and boosted depressed U.S. auto sales and overall U.S. economic output.

Ford Motor Co and Japanese carmakers were big winners.

Transportation Department officials said the government has so far processed about $500 million in rebates from 120,000 sales. The goal in coming weeks is to add more workers to process about $100 million in rebates per day.

Citigroup Inc is managing the blizzard of paperwork.

Bailey Wood, legislative affairs director for the National Automobile Dealers Association (NADA), said the pace must be faster.

We're far from solving the ultimate problem, Wood said. Dealers are still floating the government billions of dollars.

Transportation Secretary Ray LaHood, speaking in Chicago on Thursday, called the program a lifeline for manufacturers and dealers and that the administration would submit a formal report to Congress next week, which authorized the $3 billion in funding.

LaHood said any thought of resurrecting the program, which no one has proposed, would be up to Congress.

We have been criticized for spending a lot of money and $3 billion is not inexpensive. So we'll leave that decision up to Congress, LaHood said.

(Reporting by John Crawley in Washington and Nick Carey in Chicago; editing by Carol Bishopric)

Manufacturing