MINISTERS are planning to divert national lottery funds earmarked for charities and other “good causes” to help finance the London Olympics in 2012.

Since Britain won its bid to host the Games last summer, the government has been forced to admit there is a £500m gap in funding for the event arising from inflation and revised policing and security costs since last July’s terrorist attacks on the capital.

According to documents circulating in Whitehall, officials at the Department for Culture, Media and Sport plan to “top slice” £410m from the lottery good causes to help to fund the Olympics.

The move may spark accusations that the government is “robbing” charities, voluntary groups and arts organisations to pay for a London project that Tony Blair wants as part of his legacy.

Ministers, who according to the documents expect criticism, are likely to seek to justify the move on the grounds that the lottery good causes fund was designed to benefit sporting bodies as well as the arts, heritage and charities.

Vincent Cable, the Liberal Democrat Treasury spokesman, said: “It is very worrying that the lottery is regarded as a soft option for plugging the holes in the Olympic budget, which are going to get much bigger because the government has underestimated the costs.

“It is an easy option because it doesn’t involve local or national taxation, and will inevitably damage spending on good causes, particularly in areas that will not benefit from the Olympics.”

He added that he expected an independent study by KPMG, the accountants, to be published shortly, to predict that the cost of holding the Games will be double the original £1.5 billion estimate.

Tessa Jowell, the culture secretary, is expected to confirm in a speech on lottery funding on Wednesday that the funds will be raided to pay for the Games.

She is also expected to confirm that she will not reform the lottery’s distribution of proceeds. Currently 28p of the £1 lottery ticket goes to good causes; 50p goes in prizes; 12% to the taxman and the rest to Camelot and ticket sellers.

Ministers already face accusations of mismanagement after Richard Caborn, Jowell’s deputy, said the total cost for staging the Games would be closer to £2 billion than the £1.5 billion envisaged.

Explore UK News

• Crime News

• Education News

• Health News

• Scotland News

Times Recommends

• Stand-ups laughing all the way to the bank
• How Britain’s wildlife fared during the year
• UK charity bids to save Borneo’s orang-utans