Taxpayers may have to fund the full cost of the £1billion Olympic village as the credit crunch scares off private investors for the 2012 Games, Olympic chiefs have admitted.

John Armitt, chairman of the Olympic Delivery Authority also conceded that the £400 million broadcasting centre will have to be scaled down and more temporary sports venues moved out of the5 Olympic Park to stay within the £9.3 billion budget.

“The credit crunch is hitting the Olympics hard, but we remain resilient,” Mr Armitt bluntly told the London Assembly, as he warned that he would have to ask the Government for more money from contingency funds to ensure venues are delivered on time.

The ODA has still been unable to secure a deal with Lendlease the developer for the Olympic Village and has already been forced to cut the number of housing units for athletes from 3,500 to 2,800, which will result in more cramped conditions.

Mr Armitt signalled that any deal was unlikely this year with Lendlease and he refused to rule out asking the government for the full £1 billion as a last resort.

“That would be an extreme situation and we are not working towards that. We do not want to rush into any early agreement with the government,” said Mr Armitt. But he conceded that the position had deteriorated rather than improved in recent weeks and a further bail out was now on the cards.

The private sector was originally expected to fund the full £1 billion for the village but the Government has already pledged £550million with Lendlease trying to secure the remaining £450million from private banks with little success. Construction has already started to ensure the village is built in time.

“We remain very largely in line with budget with cost pressures in some areas offset by potential savings in others,” Mr Armitt told the Assembly in City Hall. “But there are clearly some factors we cannot control - namely the credit crunch. The Olympic Village and broadcast and media centres were both development projects planned in one economic environment but which are now being delivered in another where bank lending has reduced dramatically and property prices have fallen,” said Mr Armitt.

“We remain in discussion with Lendlease, their banks and registered social landlords. A deal may still be possible but it is incredibly fluid and volatile situation where the market is changing on an almost daily basis. Whatever the outcome it will require further Government investment form the funders’ group contingency in what will after all be a housing asset value.”

Mr Armitt explained that the legacy value of the media and broadcast centres had significantly reduced in the current market. “This combined with the scarcity of bank lending, and diminishng interest from potential tenants means we are having to review all out options.”

Some steps have already been taken to reduce costs in the Olympic park by removing temporary sports venues. Volleyball is now to be at Earls Court and fencing is to go the Excel centre at a saving of around £60 million. Mr Armitt suggested that Olympic venues for shooting and basketball may also have to be scaled down or removed from the Park to existing permanent sites to find extra savings.

He signalled that the £400million broadcasting centre which is already being bailed out by the public sector will have to have a bigger mix of temporary and permanent structures, to shave costs. Broadcasting studios may be temporary units which could be removed once the 2012 games are over.

David Higgins, the ODA chief executive also acknowledged that the Olympic security budget in the run up to and during the Games had still not been settled between the Home Office and the Metropolitan Police Authority, although over £850 million has so far been earmarked for policing.