British Cycling has denied that any kit or equipment provided by UK Sport has been given away or sold on for profit.
It follows the start of an investigation into claims official kit, including a high-performance bike, was available to buy online.
British Cycling said it has a "detailed and exhaustive" inventory of UK Sport-funded equipment.
The new inquiry comes after technical director Shane Sutton quit amid sexism and discrimination allegations.
Australian Sutton, 58, was also asked to attend a meeting on Tuesday to discuss the kit allegations, revealed in the Daily Mail. He said he "rejects the specific claims".
UK Sport, which is investing £30.5m in British Cycling between 2013 and 2017, ordered the investigation to "protect our investment in all sports on the world-class programme".
In response, British Cycling issued a statement explaining that:
- No kit supplied by UK Sport has left the National Cycling Centre in Manchester in the past 10 years;
- Other equipment and clothing supplied for free by commercial partners is booked in and out by a "stock management system";
- Riders are told to return it when they leave British Cycling;
- Old, unworn kit is sometimes sold at cycle jumble sales with the money reinvested into the team;
- A dealership who fix GB bikes are sometimes given old equipment as "payment in kind".
The statement added: "Once sold, we are obviously unable to guarantee what individual buyers will do with the kit they have purchased."
Confirming British Cycling's explanation, one eBay seller with an extensive collection of official kits told BBC Sport they had sourced them from jumble sales held by the organisation.
It is understood the UK Sport interest came after the organisation received information about a British Cycling bike being sold online.
The organisation now deals with a company called Cervelo but the brand of bike in question was a Pinarello.
Former GB cyclist - and long-time friend of Sutton - Phil Griffiths, of Yellow Limited, is a UK distributor for Pinarello.
He helped to broker the deal that saw the Italian company supply British Cycling's elite riders with 250 cycles over a five-year period.
He told BBC Sport the bikes were provided free as part of a mutually beneficial relationship - with the firm receiving the good publicity of elite cyclists using their machines.
The British Cycling investigation is ongoing.
The suggestion UK Sport-funded kit is being sold on is the third serious allegation made against British Cycling this week, with chief executive Ian Drake telling BBC Sport his organisation is not in crisis.
Sutton, a GB coach since 2002, is alleged to have used derogatory words like "wobblies" and "gimps" to describe Para-cyclists. An independent investigation into those accusations is under way.
A separate review will also look into claims by cyclist Jess Varnish that Sutton made sexist comments towards her, allegedly telling her to "go and have a baby" after she failed to qualify in the team sprint for this summer's Olympics.
Sutton said the allegations had "become a distraction" and he had stepped down "in the best interests of British Cycling".
He was part of the team that won seven track gold medals at both the 2008 and 2012 Olympics, with British Cycling also claiming 25 gold medals across the past two Paralympics.
There are just 99 days until the start of the Rio Olympics, with programmes director Andy Harrison taking charge of the team after Sutton's resignation.
In a statement, six-time Olympic champion Sir Chris Hoy paid tribute to Sutton's "uncompromising approach" which "yielded unparalleled results".
While saying he would not provide his opinion on the allegations, Hoy added: "I have never met anyone who gave so much to their role within any team and who cared so much for the performance of the riders."
Team Sky payment 'not declared'
Despite leaving his post at British Cycling, Sutton is still employed by professional cycling outfit Team Sky, in a paid "occasional advisory role".
Drake told BBC Sport on Tuesday that Sutton was not getting paid by Sky as well as by British Cycling, but the organisation attempted to clarify the situation on Wednesday.
It said it was not aware of Sutton's Sky retainer and that he had not declared this when he became British Cycling technical director in 2014.
UK Sport also said senior staff did not know of Sutton's Team Sky payment.
A Team Sky statement said: "Since he stepped down as head coach of Team Sky in January 2013, his occasional involvement as an advisor to Team Sky has been completely separate from his role with British Cycling.
"Any reimbursement for his work with Team Sky has been funded by the team."