Half a billion pound bail - out for 2012 Olympics

| Source: Reuters

LONDON (Reuters) - The government released hundreds of millions of pounds of contingency funds on Wednesday to keep work on the London Olympic 2012 venues on track amid a worsening credit crunch.

It also announced the media centre would be completely funded from public coffers after its planned private partner failed to secure sufficient loans.

The government released 496 million pounds from the 2 billion-pound contingency fund, with the bulk, 326 million pounds, going to the athletes' village.

This included 95 million pounds of contingency announced last October.

About 135 million pounds will go towards the International Broadcast and Main Press Centres (IBC/MPC) -- meeting the shortfall left by the absence of private sector funding. The centre will be permanent, with some temporary fixtures.

A further 35 million pounds will go towards projects including the aquatics centre, main stadium and handball arena.

The overall budget for the Games remains 9.3 billion pounds and there is sufficient contingency, the government added.

"With private sector funding now much more difficult to secure because of the global economic downturn, it is right that we take steps to safeguard these projects," Olympics minister Tessa Jowell said in a statement.

Olympic organisers had warned last year that the inability to secure bank loans could result in possible shortfalls in the two public-private projects.

Talks are continuing between Olympic organisers and Lend Lease, an Australian developer, over private investment for the estimated 1 billion-pound athletes' village.

The slump in property prices, which could damage the chances of recouping money from the village after the Games, has already resulted in the number of post-Olympic apartments being reduced from 4,200 to about 3,000.

Cheaper construction costs meant 25 million pounds had been saved on the 355 million-pound media centre.

(Editing by Astrid Zweynert)