The British Airways (BA) London Eye is facing eviction from its South Bank site due to an escalating argument over proposed rent increases.

According to London’s Evening Standard, the South Bank Centre (SBC), which owns the land the Eye currently occupies, has issued its owner – the London Eye Company (LEC) – with an eviction notice, effective from 1 July, reportedly following the LEC’s opposition to a rent increase from £65,000 a year to £2.5m.

The London Eye Company is equally controlled by architects, David Marks and Julia Barfield, and The Tussauds Group, which was appointed operator in perpetuity by BA.

Tourism officials have said that if the wheel were to close, it would be ‘disastrous’ for the city.

Shadow secretary for culture, media and sport, Theresa May, believes that the eviction notice could endanger the London 2012 Olympic bid. She said: "The Eye is an important landmark and a prominent feature in all of the London Olympic bid promotion, yet at the same time its future is in jeopardy.

“What sort of message does this send to the Olympic committee?” It is now essential that everything is done to end this unnecessary stand off and prevent the Eye’s closure. The issuing of an eviction notice by the South Bank Centre is a step too far.”

Vauxhall MP Kate Hoey has called on culture secretary Tessa Jowell to intervene while a number of celebrities – including broadcaster John Humphrys and actor Tom Conti – have joined forces to put pressure on the SBC.

Attention has also been drawn to the fact that the SBC board is chaired by a Labour peer, Lord Hollick, who was appointed by Jowell three years ago. His involvement was called “deeply disturbing” by May, and there have been calls for Lord Hollick to be brought to publicly account for his actions.

Earlier today, culture secretary Tessa Jowell responded: "I am absolutely determined that this does not escalate out of control. Both sides need to settle this matter responsibly, and do so on the basis of facts, not spin.

"I will be talking to Clive Hollick today, and will of course continue to monitor the situation very closely indeed."

While confirming that rent negotiations were taking place, BA declined to comment further while a spokesperson for the SBC said: “The BA London Eye and the South Bank Centre are conducting the negotiation of a new lease in a professional and constructive way.”

Financed by BA, the attraction cost £85m to build and celebrated its fifth anniversary on 8 March. More than 18 million people have visited it to date. The London Eye has an average income of around £40m a year. Most of the profits go towards repaying the BA loan however while the Tussauds Group takes a 4 per cent cut of the revenue in management fees.

According to the Evening Standard, the London Eye’s debt is growing at a rate of approximately £25m a year and now stands at £150m. It also claims the original agreement between the LTC and the SBC was that it would initially pay annual rent of £65,000, eventually rising to £210,000.

In May last year, BA confirmed that the LEC had reappointed one of the original financers of the attraction, Sumitomo Mitsui, to help advise on refinancing options. Details: www.londoneye.com