Cutty Sark, the historic clipper severely damaged by fire in 2007, will be fully restored in time for the 2012 Olympics after the government agreed to invest £3m in the scheme.

The Department for Culture, Media and Sport (DCMS) grant is the final piece of a £46m funding package, which will go towards the restoration of the 141-year-old ship at the heart of the Maritime Greenwich World Heritage Site. Plans for the conservation project include raising the ship by 3m (9.8ft) and opening up the dry berth, as well as improving the visitor experience and reversing the degradation to the Cutty Sark's fabric.

Located in Cutty Sark Gardens, the ship acts as a key arrival point for people visiting the World Heritage Site, comprising a number of historic Greenwich buildings, such as the Royal Observatory. The Heritage Lottery Fund has contributed a total of around £23m towards the conservation of the Cutty Sark, while the Greater London Authority and Greenwich Council also invested in the scheme.

Prime Minister Gordon Brown said: "Everyone was shocked and saddened as we watched those terrible images of fire on the news. People wondered then whether Cutty Sark could ever be brought back to its former glory. Well, this announcement means that the historic clipper will once again be open to the public - and in pristine condition - in time for the Olympics: yet another jewel for visitors in 2012 to enjoy."