State media reported recently that an elite club for the super-rich was being planned for a section of the sprawling complex at the heart of China's capital, which is now operated as a vast museum.

Reports had said club memberships were being offered for the princely sum of one million yuan ($154,000).

News of the plan went viral online, with Internet users criticising it as a sign of a creeping return to the feudalism that prevailed in imperial China for thousands of years until the 1911 collapse of the Qing Dynasty.

After initially denying the reports, authorities at the Palace Museum -- as it is known in Chinese -- issued a statement late Monday condemning the move.

"At present we have thoroughly put a stop to this inappropriate behaviour and have undertaken comprehensive changes," it said.

It blamed the Beijing Forbidden City Cultural Development Company, a marketing arm of the museum, for going ahead with the proposal at the Jianfu Palace hall without approval.

The Palace Museum said the hall "cannot and will never become a luxurious private club for the global elite and wealthy".

The state-run Global Times newspaper said "elites of society" had been invited to attend an opening ceremony, where "national treasures" would be on display and armed police would stand watch in "ancient warrior costumes."

The Jianfu Palace -- or the Palace of Established Happiness -- was built in 1740, destroyed in a fire in 1923, but recently restored by a Hong Kong tycoon, reports said.

"This is shameless... they are using a public cultural establishment to seek private profit," netizen Xia Jianzhong said in a microblog entry, echoing many postings.

"It would be better to change the name to the 'Shameless Museum'."

The Forbidden City has a nearly 600-year history and served as the imperial palace of the Ming and Qing Dynasties. It is now among China's top tourist attractions, drawing countless visitors since the Communist Party came to power in 1949.

Chinese officials are struggling to cool anger over widening income disparity, with high inflation putting further pressure on the country's hundreds of millions of low-income farmers and industrial workers.

The Forbidden City is no stranger to controversy. In 2007, Starbucks shut down a coffee outlet in the complex after a populist outcry that its presence was staining China's cultural heritage.

Last week, Beijing police arrested a man suspected of stealing 10 million yuan worth of artifacts from a temporary exhibition. The rare theft led to widespread criticism over lax security at the palace.

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