Mr Ross … identified questions over the security of the 2012 Games, its legacy and the Olympic Village as key areas which need to be “focused on”.

Significant additional public sector funding is likely to be required to deliver the project

The report points to tighter controls on bank lending, falling house prices, increased oil and raw material costs and the threat of terrorism as factors which will add “significant pressure” to the cost of the Olympics.

Mr Ross noted difficulties in securing finance for the Olympic Village and said work was ongoing with the developer, Lend Lease, and its banks to secure private equity and debt funding.

He warned: “In all scenarios some significant additional public sector funding is likely to be required to deliver the project.”

However, he said savings made elsewhere meant there “has only been a very small increase in the overall anticipated final cost of the total programme of £16m.”

He identified that security plans were “significantly behind the rest of the planning”.

“It is absolutely vital that significant progress is made quickly on security planning so that necessary facilities are identified early enough to be provided cost effectively,” he said.

And while he said there would be transport and regeneration benefits from London hosting the games, he issued a word of caution with regards to a lasting legacy.

“I am disappointed that we find ourselves at an advanced stage of the procurement process without clear and agreed plans for legacy for a number of important venues.”