Olympics chiefs may ask the Government for a bail-out of more than £400 million to keep the construction programme in the Olympic Park on track during the credit crunch.

The Olympic Delivery Authority will this month ask Chancellor Alistair Darling to grant £250 million in funds to prevent work on the athletes' village being halted early in the new year.

Extra cash will come from a £1 billion emergency fund - part of the overall £9.3 billion budget - set up for unforeseen events and controlled by the crossdepartment Funders' Committee chaired by the Chancellor.

The meeting on 15 October is also expected to hear proposals from Partnerships UK, the Treasury agency, for possible full-scale nationalisation of the village project if the developer fails to raise any funds by the end of the year when its funding contract expires. The village was originally intended to be funded entirely from private sources.

Games chiefs are likely this year to request up to £165 million in contingency funds as the developer of the media centre, the consortium Carillion Igloo, struggles to raise its share of the £400 million cost. By consuming so much of the contingency four years out, Games chiefs would be left with little margin for further increases in other parts of the budget, such as security. They will be questioned on the issue at the London Assembly on Wednesday.

The ODA has until now avoided going cap in hand to the Chancellor by making savings elsewhere in the construction project. This year a £16 million rise in the cost of the stadium was offset by £100 million-plus savings on service roads and bridges. The ODA warned the Funders Committee in July about the imminent cash crisis on the £1 billion village project after Australian developer Lend Lease failed to raise its £450 million share.

Ahead of this month's meeting, the ODA has commissioned an assessment from the Department of Communities and Local Government to show that the likely £250 million bail-out of Lend Lease is solely due to the credit markets and does not breach European competition laws. Olympics chiefs hope a £250 million boost would help them clinch a revised £1 billion funding package by the end of this year.

A source said: "It would seem to be some months before the diggers would have to be called to a halt."

Lend Lease is on schedule with groundwork ahead of the November 2011 deadline for the village of 3,300 flats.