Olympics minister Tessa Jowell and London mayor Ken Livingstone have denied that there is a £1bn black hole in funding for the 2012 Olympic Games.

However, according to the The Times, the pair then admitted that £675m borrowed from the National Lottery for the Games might not be repaid if land sales from the Olympic Park fail to raise enough money.

According to figures released last summer, the government estimates that it would earn around £1.8bn from the sale of land in East London after the Games.

Some analysts have warned, however, that if the recent slow down in property prices continues, the sale of the land might only generate around £800m.

This would make paying back the £675m National Lottery grant very difficult, as the London Development Agency is also expecting to see its loan re-paid using revenues from the sale of land.

Culture secretary James Purnell attempted to diffuse the growing row in parliament yesterday, using his time on the despatch box to announce that no further funding would be provided by the National Lottery towards the Games.

The Olympic budget is currently running at £9.1bn, nearly triple its original estimate.