The 2012 Olympics will cost more than £9 billion, culture secretary Tessa Jowell announced today, nearly three times the original estimates.
However, amidst criticism of spiralling costs, Downing Street has reminded critics the government is funding the "biggest regeneration programme since the Second World War".
The £9 billion Olympic village in the Lea Valley, east London, will be the "biggest catalyst for regeneration in Thames Gateway", the prime minister's official spokesman (PMOS) said this morning.
The 2012 games will create new homes, public transport links and jobs for east London, Downing Street said, while the benefits will spread across the rest of the UK.
Ms Jowell told the House of Commons today the total cost of the Olympics will be £5.3 billion. This includes the £3.1 billion cost of building the Olympic park in the Lea Valley, £1.7 billion for "Olympic regeneration and infrastructure" and £500 million contingency fund.
There is also a further £2.7 billion "contingency fund" bringing overall costs to £9.34 billion, nearly treble the £2.4 billion originally quoted.
Ms Jowell defended the additional costs, tell MPs staging the Olympics was "already changing lives, communities and building ambition".
"It is full steam ahead for 2012," she added, before noting that no additional funds would be raised from "further council tax or transport cost increases".
The National Lottery will provide an extra £675 million to help cover costs, the culture secretary explained, brining its total contributions to £2.2 billion.
However, the Conservatives warned other groups who benefit from Lottery funding will now be deprived. Olympic finances are out of control, the Tories argued.
The Liberal Democrats also claimed the budget is in chaos, bringing into question the government's ability to manage the games.
Lib Dem culture spokesman Don Foster said: "Far from working together, the last year has been characterised by chaos, confusion and infighting of epic proportions."
Warning the government cannot write any more "blank cheques", he added: "Today's statement must put an end to the type of government squabbling that is undermining confidence in the Games."
The Olympic village is being built in one of the most deprived areas of the UK, with the Games welcomed by ministers as a major catalyst for investment in east London.