No Funding Package For Olympic Village This Year

Due to the current situation in the credit and housing markets it is now likely that these negotiations will run into next year.

A funding package for the 2012 Olympic Village will not be in place before the end of the year, Britain's Olympic Minister Tessa Jowell has said.

The delay will increase the likelihood of the project cutting deeply into the government's 2.2 billion pounds ($3.61 billion) contingency fund.

Construction of the village has been hit by developer Lend Lease's struggle to secure its share of funding for the one billion pounds project because of the credit crunch.

The Olympic Deliver Authority (ODA) said earlier this month that there was a 250 million pounds shortfall in funding while the Government confirmed on Tuesday that it had released 95 million pounds to keep building work on track.

Work has already started on the east London site which will feature around 3,000 apartments to house the estimated 15,000 athletes and officials during the Games.

"The Ministerial 2012 Funders Group has approved the continuation of negotiations with private sector partners, including Lend Lease, banks and Registered Social Landlords to fund the construction of the Olympic Village," Jowell said on Tuesday.

"Due to the current situation in the credit and housing markets it is now likely that these negotiations will run into next year.

"Our priorities are to secure value for public money, the Village delivered on time and a long-term asset that will provide up to 3,000 homes, with a return for the taxpayer.

"In the meantime 95 million has been identified within the 9.3 billion budget to enable work to continue on the Village so that it is delivered on time."

Falling house prices in the capital have already forced the ODA to reduce the number of apartments in the village by around 1,000 because of uncertainty about their value after 2012 when they are to be sold off to recoup the investment.

However the ODA said on Wednesday that athletes would not be forced into cramped conditions and that the ratio of athletes to apartments would be around the same as at this year's Beijing Games.

"As we have said previously, we have been reviewing the scope of the Olympic Village to ensure we only build what is necessary for Games while ensuring we meet IOC requirements," an ODA spokesman said.

"We will continue to work on the scope and layout of the Olympic Village, working closely with LOCOG and the British Olympic Association.

"Room configurations will be developed and finalised in accordance with IOC regulations, taking into account the experiences in the Beijing 2008 Games."