Two of the main venues in the Olympic Park may have to be nationalised, with the taxpayer paying nearly £900 million extra as the credit crunch hits the 2012 Games, The Times has learnt.

Ministers will meet Boris Johnson, the Mayor of London, this week to consider ways of meeting the soaring bill after a lack of private investment. Alistair Darling, the Chancellor, Tessa Jowell, the Olympics Minister, and Hazel Blears, the Communities Secretary, have yet to agree how to find the cash, with Ms Blears resisting pressure to raid at least £250 million from her department.

Initially the private sector was expected to meet the full £1 billion cost of the Olympic Village and at least half the cost of the £400 million media centre.

A deal was supposed to have been reached with Lendlease, the developer of the Olympic Village, by the end of this year. But Lendlease has been unable to raise money because of the current financial crisis and the athletes’ accommodation will now be unviable without extra government funds.

About £550 million of government funding has already been allocated for Stratford Park and the infrastructure for the Olympic Village, including electricity cables and water supply. But an extra £850 million to £900 million still had to be found for the village through a mixture of funding from housing associations, private investment and the taxpayer. So far no money has been guaranteed from either the private sector or housing associations.

The cost of the village has gone down marginally as the number of houses was cut from 4,000 to 2,800 as a result of the housing market slump. The reduction has already led to fears that accommodation will be cramped, with athletes sharing rooms.

John Armitt, chairman of the Olympic Delivery Authority (ODA), has argued that further time should be allowed to reach a deal with private investors but ministers are under pressure to underwrite the funding to restore confidence in the Olympic project. Mr Armitt has said that in the worst-case scenario the taxpayer might have to foot the whole bill.

Yesterday the ODA admitted that more public funding was necessary and indicated that Ms Blears’s department may have to contribute.

An ODA spokesman said: “More public sector investment will clearly be needed for the Olympic Village, given the problems in the banking sector and the deterioration in the property market. This would be an investment in a long-term housing asset that can then be sold in the future. Commercial discussions are continuing, and we remain committed to delivering the overall project within the £9.3 billion budget.”

It is understood that ministers will next week discuss an extra allocation of £450 million for the Olympic Village and the media centre, although this will not meet the entire cost of the projects. A spokesman for Ms Blears said that she expected any extra money to come from the Olympics contingency fund.

Olympic sources said that if the taxpayer met the full cost of the bill the Government would have complete ownership of the venues after the Games and could sell the homes for mixed social and private housing.

The lack of private investment in the park has already resulted in scaling down projects and moving venues, and there is growing concern that this could jeopardise the park’s legacy.

Also high on its agenda will be the fate of the Olympic basketball arena. The arena will cost £60 million but is only temporary and will thus have no legacy value.

Tessa Jowell, the Olympics Minister, said last night: “We are not going to lock ourselves into a private sector deal which will not give best value for the public. The village will be built, but how much will be public or private sector will be something that will be negotiated. If the private sector doesn’t put in equity now, it can do so later.”

Times Recommends

• Oh no, Mr Darling: you have failed
• BBC survives dogfight over Kennel Club expose
• Where the Rosetta belongs can’t be set in stone