THE mayor of London, Boris Johnson, is planning to go cap-in-hand to the Chinese government after the credit crunch and falling house prices left a £250m hole in funding for the 2012 Olympics.

In return, he plans to offer Beijing a share in a university that could one day be based in the athletes’ village and media centre and run jointly by institutions in Beijing and London.

Johnson discussed the idea two weeks ago during the Paralympic games with Zhang Mao, the deputy mayor of Beijing, who oversaw construction of the city’s Olympic park.

Zhang is understood to be enthusiastic, both about the university and about investing in other Olympic venues.

The move is an attempt by Johnson to find badly needed extra funding for the £1 billion village after Tessa Jowell, the Olympics minister, ruled out a bail-out by the taxpayer.

“The idea of creating a university there appeals massively to the mayor,” said a spokesman for Johnson.

“We are still at the early stages of negotiation but the deputy mayor [of Beijing] was very excited about the idea of doing a joint venture between a big business school in Beijing and a distinguished university in London, such as LSE or Imperial College.”

Johnson, who has expressed concern at the lack of a coherent “legacy master plan” for the Olympics site, will meet Zhang again in London next month.

The Chinese government is also understood to be keen to invest in other large-scale infrastructure projects in the capital, such as Crossrail, the London Underground and the proposed Thames estuary airport.

Money for the athletes’ village is desperately needed. Developers are finding it harder to raise cash thanks to the credit crisis and the collapse of the housing market, which has also cast doubt on plans to sell the site for housing after the games.

Architects have been ordered to reduce the number of apartments in the village by 1,000, meaning five athletes will have to squeeze into flats originally designed for four.

Olympics chiefs admit they have been forced to look for alternative sources of finance, either by raiding the £2 billion contingency fund or by making cuts elsewhere in the £9.3 billion budget for the games.

Earlier this month, the Olympic Delivery Authority, the body responsible for building the venues and infrastructure, said it was advising the government on funding options as the economy slows down.

“What is happening in the markets means the availability of funding is more difficult,” said John Armitt, chairman of the authority. “If it is available, it is available on harsh terms.”