Taxpayer faces spiralling bill for Games as funding dries up

John Armitt, chairman of the Olympic Delivery Authority, said there was an increased chance that the £900 million Olympic village may not attract any private funding as planned.

His comments come after public funds were used last week to bail out the 2012 media centre after the private developer pulled out of the project.

Gallery: How the Olympic Park will look

During the 2012 bid, private sector money was pledged for the media centre and the village while all the sports venues were to be built from the £9.3 billion publicly funded budget.

Under original funding plans the Government and developer Lend Lease were to have jointly funded the village. But as credit has dried up the ODA has been forced to raid £326 million from the Olympic contingency fund.

Mr Armitt confirmed that the ODA could not "rule out" a complete failure of private sector funding for the village.

But as the impact of the credit crunch on the Games becomes clear, Mayor Boris Johnson has honoured his pledge to use 2012 to encourage sport participation on a local level by announcing a £15.5 million injection to boost grass roots sport in London.

The Mayor used his statutory power for the first time to direct the London Development Agency to allocate the cash from its budget over three years. At last year's Beijing Olympics he pledged to release the money in an effort to tackle growing obesity levels.

He described the injection as an "entirely appropriate" use of LDA funds.

Meanwhile, the first section of the roof for London's showpiece Olympic Stadium is being fitted this week.

With the first steel section of the roof being lifted into place, the height of the stadium is now almost 37 metres.

A 1,350-tonne crane has been used to lift each 85-tonne section while it is bolted to the roof-support columns.