Britain would not have bid to host the 2012 Olympics if the government had known it was heading for recession, the minister in charge of the London Games was quoted as saying yesterday.
Olympics Minister Tessa Jowell was reported in the Daily Telegraph as having made the admission to leisure industry bosses at a dinner in London earlier this week.
"Had we known what we know now, would we have bid for the Olympics?" she was quoted as asking. "Almost certainly not."
The government is under pressure to keep costs down after the budget spiralled from an initial estimate of £2.4 billion to £9.3 billion.
It has looked at ways of reducing costs including switching venues and scaling down others.
Fencing has been moved to an existing permanent venue, while viability tests on the proposed shooting, equestrian and basketball sites are being carried out by accountants KPMG.
Olympic chiefs have warned the credit crunch could result in a shortfall of funding for the two public-private sector projects, the estimated £1 billion Olympic Village and the £400 million media centre, endangering the number of post-Olympic apartments and business facilities.
Jowell attempted to play down the comments yesterday, saying they should be read in context.
"I have often observed that we bid for 2012 in one economic climate and are now in another," she said in a statement.
"Had the scale of the downturn been anticipated, I am sure there would have been a view from some that this would not be the time to commit significant public expenditure to a project like the Olympics."
"But as I made clear in my speech, the reality is very different."
The central bank this week said the country was sliding into recession, and the economy would shrink sharply over the next year as the year-old credit crisis took its toll.
Jowell added: "This is precisely the time for this investment to be made. It has the potential to be economic gold at a time of economic need.
"It will regenerate one of the most deprived parts of east London and is already creating billions of pounds worth of work for British companies and jobs for thousands."