The highly controversial move - which has prompted angry accusations that the inquiry can no longer be considered impartial - will see the five civilian representatives on the Columbia Accident Investigation Board (CAIB) each receive executive-level salaries of up to $134,000 (82,000) a year.
If the civilians - who were supposedly recruited to ensure the investigation was independent from Nasa - had not been hired by the agency, the board would have had to meet publicly, justify any closed-door sessions and keep transcripts and minutes that would ultimately become public records.
However, the CAIB has exploited a legal loophole which allows boards composed entirely of ‘federal employees’ to conduct their business in private.
Seven members of the 13-strong board are serving military officers, two are federal transportation officials and one is a Nasa employee. Retired navy admiral Harold Gehman, who is leading the board, is being paid $142,500 from another federal agency. Now that the remaining five have been put on the Nasa payroll temporarily, all the board’s members are federal employees.
In the wake of the revelation, Senator Bill Nelson has vowed to seek full disclosure of all testimonies obtained by the Columbia Accident Investigation Board, even if it means Congress invoking its subpoena powers to do so.
He says the credibility of the inquiry - set up to examine the causes and circumstances of the February 1 catastrophe - is at stake, following an earlier admission by the CAIB that it has conducted 200 witness interviews in secret.
Nelson, a Florida Democrat, said: "It’s not going to be credible with the American people unless it is made public. Secrecy may be policy in military investigations, but Nasa is a civilian agency."
All seven astronauts aboard Columbia died when it broke up during re-entry. Within minutes of the catastrophe, Nasa administrator Sean O’Keefe established an inquiry panel led by Gehman, who made great play of the fact that he wished his investigation to be transparent and independent of the space agency.
Commenting on the decision to put the civilian members of the panel on the Nasa payroll, Steven Aftergood, head of the project on government secrecy at the Federation of American Scientists, said: "They perpetrated a trick that I believe is unseemly. They are playing games with the law in order to avoid full disclosure."
He added: "By going behind closed doors, it has damaged the principles of open government.
"They have reinforced the notion that it’s not possible to conduct an honest inquiry in public. This is not a criminal investigation, nor is it a military investigation. This is an accident investigation looking at why seven people lost their lives, but unfortunately that distinction seems to have been lost."
But Gehman said guaranteeing anonymity to witnesses such as Nasa employees and contractors was the only way of ensuring a "complete, rich, deep review" of the shuttle programme and establishing as closely as possible what went wrong with the STS-107 mission.
"The purpose is to find out things that they would not volunteer under questioning," he told a hearing of the US Senate’s commerce, science and transportation committee in Washington last week.
Regarding the funding of the five civilian panel members, who include America’s first female astronaut Sally Ride, Gehman added: "This board is completely independent. Congress enacted a $50m grant to conduct this investigation.
"Nasa keeps the books for me but I spend that money, so somehow suggesting that members of this board are influenced by the book, by the way the records are kept, I find to be somewhat naive."
Nasa’s chief spokesman Glenn Mahone has also defended the CAIB, saying its members possessed "integrity beyond reproach".
But several members of the senate committee, including the chairman, Republican John McCain, expressed dismay at the secrecy arrangement.
Professor Richard Berendzen, an astronomy expert at the American University in Washington DC and a former Nasa consultant, said he found it disconcerting that any of the space agency’s employees should fear they would be in trouble just for giving honest testimony.
In addition, while he was satisfied that the CAIB was conducting a "robust and hard-hitting investigation", he believed the secrecy issue and the matter of the Nasa-administered salaries might be damaging.
"The public perception of this could be that it has the appearance of a conflict of interest. It could therefore be unfortunate, because whatever findings they come out with, somebody might always say: ‘Yes, but...’"
The CAIB will start writing its final report next month, the leading theory still being that a chunk of insulating foam fell from the shuttle’s fuel tank during lift-off, slamming into the left wing. As Columbia returned to Earth 16 days later, super-heated gases seeped into the wing through the resulting damage, causing the shuttle to break up.
From studying video footage, Gehman’s team has established that foam had fallen from the same spot on seven previous flights - yet Nasa was only ever aware of four such cases and never judged it a safety risk.
Arthur Stephenson, director of Nasa’s Marshall Space Flight Centre in Huntsville, Alabama - the facility responsible for shuttle fuel tanks - announced last Tuesday that he was stepping down.
The inquiry is also addressing broader issues such as management culture and safety reporting procedures.
Once the CAIB report is published, the next question will be when the three remaining shuttles - Atlantis, Endeavour and Discovery - will be allowed to fly again.
COLUMBIA exploded while re-entering the Earth’s atmosphere on February 1 this year at the end of a 16-day mission. All 7 of its crew were killed.
The mission, dedicated strictly to scientific research, was a rare space shuttle flight that did not stop at the international space station. During the mission the crew of the shuttle worked on more than 80 experiments.
Among the astronauts aboard was Ilan Ramon, 48, a colonel in the Israeli Air Force, and the first Israeli to go into space. The launch was carried out amid strict security for fear of a terrorist attack.
The spacecraft was the oldest of Nasa’s fleet of shuttles. In April 1981 it became the first shuttle to fly in space and consideration was given to withdrawing it from service in 2001. However, it had undergone a $90m, 17-month overhaul that began in September 1999.
It is now believed that the flight was doomed from the moment it took off and a chunk of foam from the external fuel tank struck the shuttle’s left wing. Damage to the wing’s leading edge led to a ‘thermal breach’, allowing superheated air to enter the wing on re-entry.
Plans for carrying out in-orbit repairs to the shuttles during future flights are now being developed.