Land sales to leave £1bn black hole in 2012 budget

They told the London Assembly they were not prepared to go beyond their "prudent" estimate that lands sales at the Olympic site would raise £838 million.

Olympics minister Tessa Jowell and Ken Livingstone have said they will recoup £1.8billion after 2012, some of which is intended to repay £675 million borrowed from the National Lottery to fund the Games.

But the LDA warned that if land prices increased by six per cent annually-over the coming years, the actual figure raised would be about £1billion below Government predictions. Chief finance officer Andrew Travers said: "It's my job to take a prudent view. The figure that we're basing our planning on is a six per cent growth assumption which generated £838million. Now obviously it's for others to comment on why they make the assumptions they do."

He denied that other assumptions - based on growth rates up to 16 per cent - were rash.

However, estate agents in East London have said 16 per cent was ludicrous and predict annual rises of four to six per cent.

Ms Jowell today assured MPs that her department had also made " prudent" assumptions about the future value of the site.

She said organisers would wait up to 10 years get the best price in the property market in east London.

Although she and Ken Livingstone have promised to return the cash raided from the Lottery last year, they are obliged first to pay back £650million from land sales to the London Development Agency for the cost of buying up the 500-acre Olympic site.

Ms Jowell told the culture media and sport select committee: "We will sell the land in the most favourable circumstances." She added: "We obviously want to get the Lottery money back as quickly as possible. It's absolutely clear who are the beneficiaries from the land sales - the Lottery and the LDA ... The Lottery is not a supplicant here."

Meanwhile, the Olympic aquatics centre was at the centre of a funding row after council chiefs refused to pay more towards the final bill. Newham and Tower Hamlets have agreed to pay £5million and £1.5million respectively for a leisure pool extension at the facility after 2012. But they fear the Olympic Development Authority will demand more.