The bitter row over the non-selection of Aaron Cook has caused the British taekwondo team "unwanted and significant" distractions ahead of the Olympics, but UK Sport insist such controversies will be addressed for future Games.
Cook was overlooked for the taekwondo team despite being world number one in his category, and there has been criticism about the lack of transparency surrounding the sport's selection policy.
Taekwondo have agreed a target with funding body UK Sport of between one and three medals from their four athletes competing in London.
UK Sport's Mission 2012 tracker board, which monitors the progress of Olympic sports, warns that the Cook row has had an adverse effect.
It states: "The high profile 'noise' generated around this matter has been an unwanted and significant distraction for the team at an important time."
UK Sport chairman Sue Campbell and Olympics minister Hugh Robertson told a news conference that there would be more stringent rules surrounding selection policies. Sports would have to agree to the new rules in order to receive funding.
Campbell said: "We will have a much stronger line on governance - there are still some sports that need to improve governance."
Robertson added: "That has to change and it is a challenge for all of us. There will be a new set of criteria in next set of funding agreements where we will be addressing that and having much more transparent and accountable selection procedures."
Sports will be expected to publish their selection process on their website and tell athletes how and why selection is determined.