Although the figure is lower than Whitehall's all-time record spend of £192.4m for the previous year, it is higher than expected.
A Tory spokesman said: "We will be looking very carefully at the new figures to see where this huge amount of money is being spent and whether taxpayers are getting value for money."
The total for the 2001-02 financial year, which is still being finalised, will be disclosed when COI Communications publishes its annual report in about three weeks.
The forecast £165m figure dwarfs the £113.5m spent by Whitehall departments in 1999-00, the £105.5m budget in 1998-99 and the £59m in 1997-98, the Blair Government's first year in office.
With no sign of Labour's appetite for ad campaigns waning, Whitehall officials predict another high spend in the current financial year, and say the Government is easing the pain of the ad industry and ITV at a difficult time.
Although ministers claim the high spend reflects Labour's election pledges to improve public services, the COI report will trigger a debate about whether the ad budget fully reflects the party's key policy priorities.
The biggest individual budget last year is believed to be DFGW's £14m blitz promoting the University for Industry. There are also doubts among some ministers about the huge campaigns on social security fraud, the Working Families Tax Credit and the Children's Tax Credit.
In an attempt to ensure ad campaigns dovetail with the government's priorities, Carol Fisher, COI's outgoing chief executive, was given an extra role as the government's chief adviser on marketing communications and information campaigns.
It is unclear, however, whether her successor at COI will be asked to take on the advisory job as well.
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