A new funding deal for London 2012 athletes was announced last night as the Government gave warning that it had “reached the very limit” of public investment in Olympic sport.

An eleventh-hour £50million bailout secured by Andy Burnham, the Secretary of State for Culture, Media and Sport, means that all Olympic and Paralympic sports will receive some funding in preparation for the London Games.

Expensive team sports had been braced for deep cuts that threatened their ability to field teams in 2012. The extra money may be enough to protect the elite programmes of hockey and basketball, both popular sports important in the Government's policy to increase participation by hosting the Games.

Minority pursuits, such as handball and volleyball, will be hit with cuts but Burnham said no sport should be totally cut adrift without funds. Each sport will today learn its grant allocations for 2009-13 from UK Sport, the funding agency for elite athletes.

The last-minute injection of £29million from the Exchequer and £21million from extra Lottery receipts brings public funding in elite sport to £550million since the Athens Games in 2004. But it still leaves a £50million shortfall in a £600million package announced in the March 2006 Budget by Gordon Brown, the Prime Minister, when he was Chancellor. This extra money, which would have topped up the £304million secured for the four-year London cycle to £354million, has not materialised during the depressed economic climate.

“This still falls £50million short of what the Government unconditionally promised sport it would get two years ago,” Hugh Robertson, the Shadow Olympics Minister, said. “This whole sorry saga could easily have been avoided if the Government had not diverted Lottery money away from sport, been more honest about the small print of the announcement or got on with raising sponsorship in 2006 rather than dithering and allowing the recession to take hold.”

Officials in the Department for Culture, Media and Sport, aided by Fast Track, the marketing company, have failed to attract private-sector money to their Medal Hopes scheme, designed to plug the gap in 2012 funding. In a sign of the financial pressures on the Olympics, leading sponsors of the 2012 Games met the Prime Minister to discuss ways to beat the credit crunch. Lord Coe, chairman of the London 2012 Organising Committee, said: “In these challenging times, we all need to look at creative ways in which we can make the most of these [sponsorship] partnerships.”

Burnham said that efforts to rally businesses around 2012 athletes would continue but said that no more money would be coming from the Treasury or the Lottery. “I have made it clear that we have reached the very limit of public investment in Olympic sport,” he said. “I accept that raising private funds is challenging in the current economic conditions but British business has a great track record of investing in sport. I urge them to rally round the British athletes as we prepare for this historic moment of our first home Olympics in generations.”

Officials at UK Sport will still have some difficult calls to make today. Hockey, a borderline case but also one of the highest participation sports in Britain, played by 150,000 adults and several hundred thousand schoolchildren, hopes to benefit from the latest cash boost.

“London 2012 is all about inspiring young people to take up sport so if we don't have all British teams competing to the best of their abilities, it would definitely have a negative impact post-Games,” Philip Kimberley, chief executive of Great Britain Hockey Limited, said.

Basketball, another sport crucial to engaging with Britain's youth, expects to receive enough to field competitive men's and women's teams in 2012. “I find myself agreeing with Andy Burnham - sport has to get real and not be totally dependent on government funding,” Alistair Gray, chairman of British Performance Basketball, said. “We will have to prioritise like other sports. Those progressing should be rewarded. It's not a care home - it's about performance.”

Olympic chiefs hope to achieve fourth place in the medals table in London, matching the feat in Beijing in the summer, where the Great Britain team turned in their best performance for a century. “We see this as a significant further investment in high-

performance sport, which will allow us to build on the superb performances of our athletes in Beijing,” Sue Campbell, chairwoman of UK Sport, said.