Olympics host faces £7m loss in Iceland

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Newham council invested £7million in deposits which have been frozen as the Nordic state battles to avoid bankruptcy. Other boroughs which may have lost taxpayers' money are Barnet, Brent, Bromley, Haringey, Havering, Hillingdon, Sutton and Westminster.

The Metropolitan Police Authority has potentially lost £30million, Transport for London £40million, and one of London's biggest NHS trusts the Central and North West London NHS Foundation Trust stands to lose more than £2million.

Staff at Braintree council in Essex were facing the prospect of wages being frozen after bosses invested millions in three collapsed Icelandic banks.

Unison, a trade union representing local government workers, has expressed "grave concern" about the potential consequences for staff wages. Officials and lawyers from all over the world are this week holding crisis talks in the Nordic state in an effort to claw back deposits and debt.

The Local Government Association has called on the Government to cover their losses as well as those of individual depositors.

A Newham council spokesman said: "We can confirm that the council has £7million placed with the Landsbanki and Glitnir banks. It is a very small proportion of the council's overall budget, so there will be no impact upon our ability to deliver services or pay staff."

The NHS trust was unavailable for comment but a spokesman for its watchdog said patient services would not be affected. More than 100 councils, fire and police authorities, transport authorities and universities are among publicly-funded bodies that have invested £1.2billion in Icelandic banks.