BEIJING (AFP) - The capital of China's quake-hit Sichuan province has bowed to public pressure and will auction off its luxurious new government headquarters to aid the recovery effort, state media said Thursday.

Proceeds from the sale of the controversial Chengdu city government building will go towards rehousing quake victims and for reconstruction, the China Youth Daily quoted He Huazhang, head of the Chengdu propaganda department, as saying.

The move follows a public outcry after rumours circulated online that government personnel began moving into the building just three days after the 8.0-magnitude earthquake shook Sichuan province on May 12, killing nearly 70,000 people.

The newspaper report said the move actually began at the end of April but the high cost of the building further angered Chinese netizens. The paper said it cost 1.2 billion yuan (176 million dollars).

"All of a sudden it makes me lose hope in the current government," one netizen wrote on popular web portal sina.com.

"I don't believe our national leaders didn't know about such a huge project. Pity the poor students who died in the earthquake."

The deaths of thousands of children whose schools collapsed on top of them remains one of the most sensitive issues arising from the quake, and has led to accusations that corruption facilitated the use of shoddy materials.

The government building is located on 17 hectares (42 acres) of land, and measures 370,000 square metres (four million square feet), the China Youth Daily said.

"I think that what was behind this move of moving in and moving out so quickly was some internal self-examination, and the pressure of public opinion from outside," the paper said in a separate commentary on the issue.

According to the Beijing News, the earthquake killed 4,304 people in Chengdu, and caused damage worth more than 120 billion yuan in the city alone.

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