The decision by a US federal judge to approve the proposed $750m (£459m) settlement between disgraced telco WorldCom and US regulators has been slammed by campaigners.

US action group Citizens Against Government Waste (CAGW) believes the fine, of which $250m is in stock, has let WorldCom, now called MCI, off lightly.

"This fine is not sufficient to act as a deterrent to future corporate corruption," said Tom Schatz, president of CAGW, in a statement.

"It is disappointing that the company that commits the greatest fraud in American history, $11bn, leading to a loss of $180bn to the retirement accounts and savings of thousands of people, receives only a slap on the wrist."

Schatz also feared that the court decision could affect an ongoing investigation into whether or not WorldCom should continue to receive government contracts.

US officials stopped both Enron and Arthur Andersen from being awarded government contracts after their accounting practices were exposed, but did not do so when MCI went into Chapter 11 bankruptcy protection and its executives were accused of fraud.

Last week, US officals began proceedings to determine whether or not to suspend MCI.

"One can only hope that the review of federal contracts with MCI/WorldCom has a more lasting impact on the company than today's decision," said Schatz.

CAGW claims that since seeking Chapter 11 protection, WorldCom has received more than $1.2bn in federal contracts, which has more than offset its punishment.

"Corporate misdeeds can be punished without imposing a 'corporate death penalty,' while also protecting investors and taxpayers. The WorldCom ruling failed to do so," said Schatz.