The 2012 Olympic village has a £250m (€309.7m) funding shortfall will have to be met from public money due to the lack private sector funding.

A report in the Guardian newspaper at the weekend stated that plans for the private sector to build more than 3,000 apartments for competitors on the Olympic campus in a £1bn (€1.24bn) programme have been affected by the credit crunch and falling property prices, which could damage the prospect of recouping money from sales after the games.

Government officials have now admitted they are set to launch a rescue package.

“The Olympic Delivery Authority is doing all it can in difficult circumstances, but the property crunch and the credit crunch means we are looking at a funding gap of around £250m for the athletes' village at the moment," a senior government official said.

The money will have to be found from the overall £9.3 billion (€11.5bn) of public funding set aside to stage the games, and the Treasury is understood to want most of the £250m to be found through cuts.

Architects have already been ordered to reduce the number of apartments in the village by almost 1,000, which means during the games five athletes will have to share each apartment rather than four.

A number of high-rise blocks in the village have been also scrapped.

An announcement detailing the deal with Lend Lease, the property developer, will be made by the end of the year, the official added.

Olympic organisers insist any cash injection will not add to the overall cost of building the games venues and providing security.

David Higgins, the chief executive of the Olympic Delivery Authority said: "We have a fair idea of how we can fund the village. We are advising the government on various options and we are working with Lend Lease, the banks, the funders and the housing association to look at them."

He added: "We make no bones about it, it is a very difficult market for housing, for property and for east London. Building 3,000 homes in one go is not something that anyone would normally do, let alone in this market."

Higgins said the plans to build a partly permanent media facility which could become offices after the games are under review.

The building has an estimated cost of £400m and one option being considered is to make it entirely temporary.

Source: Guardian