£2.2bn emergency fund could pay for Olympic village

Ministers are considering using an “untouchable” £2.2bn emergency fund to build the troubled London 2012 Olympic village.

Plans are being drawn up to rescue the project - in danger by the credit crunch and falling property prices - using an unspecified amount in the sealed contingency fund.

Olympic village builder Bovis Lend Lease is struggling to raise cash to fund the £2bn project in the face of the lending crisis.

The company also fears a London property crash would restrict the money it could recoup on the project.

Olympics Minister Tessa Jowell and Chancellor Alistair Darling would have to approve use of the fund, the Daily Telegraph reported.

While the newspaper said no date has been set to discuss the matter officially, progress will have to be made by the end of the year to keep the project on schedule.

Already officials have come under fire for letting the Olympic budget of £3.4bn soar to £9.3bn.