TOKYO, May 19 (AFP) - A Japanese man given US$360,000 in COVID-19 aid by mistake has been arrested after saying he gambled away the money online, police said Thursday (May 19).

Local authorities have become increasingly desperate to get their money back from the 24-year-old, who has said he will return the cash "even if it's going to be bit by bit".

The blunder by authorities in the remote town of Abu and the man's failure to pay them back has sparked outrage in Japan, with talk shows discussing the intricacies of his financial situation.

He was transferred the 46.3-million-yen lump sum in error last month by officials who were organising cash handouts for low-income residents affected by the pandemic.

After visits, calls and letters failed to convince the man to repay the money, authorities filed a lawsuit last week in an attempt to get it back.

The man is now in custody after being arrested "on suspicion of violating computer fraud laws", an officer at the police department of western Japan's Yamaguchi region told AFP.

The man told police he had spent the illicit windfall at online casinos, and is suspected of moving some of the money to a different account even though he was aware of the mistake.

Abu mayor Norihiko Hanada told reporters on Thursday that the arrest marks "a step towards the truth".

"I don't believe outright (that he used it all), and I think it's possible (there's money) somewhere," he said.

Hanada's staff are exhausted from angry calls and emails from the public, he added.