Security costs have also risen to at least £900m.

In the wake of heavy criticism of the government's handling of the games, Culture Secretary Tessa Jowell admitted to parliament in November that the cost of the Games would rise by £900m - 40% - to £3.3bn.

But critics have continued to express wide-ranging concerns about planning, over everything from transport to the burden on the tax payer and effect on the National Lottery's funding of good causes in order to meet costs.

Decontamination work

The Treasury's insistence on how the budget is drawn up is thought to have considerably added to the costs of the games.

It is understood it now insisting a 60% contingency should be to be added to the construction cost.

But this figure has been resisted both by the Mayor of London Ken Livingstone and also the DCMS.

Both of them would like a much lower contingency, a view that appears to have support from CLM, the Delivery Partners.

A variety of other factors are also at play.

These include rise in commodity prices, adjustments to transport figures to reflect 2012 prices and a revised estimate for inflation on construction costs.

The land in the east end of London chosen for the site also needs decontamination and major remedial work before it can be fit for the games.

The Treasury has also decided that the Olympic Development Authority will have to pay VAT.

While VAT is in effect paid to the Treasury, the cash initially still has to be found before it is reclaimed.

The £5.3bn budget for the Olympic Delivery Authority was made up of £3.1bn to build the Olympic Park and venues, £1.7bn for regeneration and infrastructure and a £500m contingency allowance.

She said the contingency fund of £2.7bn which would only be drawn upon in "very tight conditions".

Another £600m had been allocated for "wider security" outside the site, and £390m for other costs including the Paralympics and community sports coaches.

'Huge financial gain'

The government's contribution has risen to £6m, she said - the rest will be met from London's council tax payers and the National Lottery.

Ms Jowell responded to criticism of taking more from lottery good causes by saying the Lottery would benefit from profit sharing based on rises in land values in the Olympic park area.

"London 2012 will bring huge financial gain to the whole country ... and it is only fair that the Lottery good causes should share in any such windfall," she told MPs.

"I am determined to ensure that this temporary diversion from the existing good causes to the Olympic good cause is done with the least possible disruption."

London Mayor Ken Livingstone has also pledged to contribute an extra £300m, she said - but the money would not be funded from London's council tax, nor higher transport fares.

'Trebled'

Winning the Olympics had brought an extra £7bn of private sector investment to one of the most deprived areas in Europe, Ms Jowell said.

"The announcement today means it's full steam ahead for 2012," she added.

But for the Conservatives, the shadow Olympics minister Hugh Robertson said: "If you add together all the separate parts, the budget for which the government is responsible has nearly trebled since the Olympic Bill left Parliament under a year ago.

"In raiding the Lottery for a further £675m to make up the shortfall the government will penalise precisely the clubs and small organisations, up and down the country, that were supposed to benefit from the Olympics."

For the Lib Dems, Don Foster MP said: "Properly managed, the 2012 Games will bring huge and lasting benefits to all parts of the country.

"But sadly today's statement and the chaos that has surrounded the last 12 months and more, calls into question the government's ability to provide that proper management."

He said the plans to take more money from the National Lottery equated to a cut of £1m to every constituency in the country.

The committee said progress had been made "on a number of areas" particularly on the crucial project to relocate power lines underground on the Olympic Park site.

And the Olympic Delivery Authority had appointed a "delivery partner" to make sure the Games came in on time and on budget, it noted.

Immovable deadline

But it said "strong progress and risk management arrangements are essential, but are not yet in place".

The report pointed out a "plethora of bodies" were involved and said the Department of Culture, Media and Sport needed an agreed plan "of what needs to be decided, when and by whom".

And it warned that the "immovable deadline" of 27 July 2012, left organisers vulnerable - as they may end up having to pay contractors more, or accepting lower standards, to get the job finished.

It recommended "incentive arrangements" with contractors to deliver quickly, to cost and to the right quality.

The report also criticised the omission of tax, contingency fund and security from the original estimates for the budget - which stood at £2.4bn in 2005 but is now put at £9.35bn. A further report is expected from the National Audit Office on the budget.

The government had been "far too optimistic" about private sector funding, says the committee's Tory chairman Edward Leigh.

2012 legacy

The committee also criticised a "lack of clarity" about how five venues will be used after the Games, saying plans should be finalised.

Mr Leigh said: "If the London Olympic and Paralympic Games are to be the great success we all want them to be, then the risks to delivery will have to be managed with an iron hand.

"The Department for Culture, Media and Sport is ultimately responsible for coordinating the array of bodies involved. It is worrying, therefore, that strong arrangements for monitoring progress and managing risk are so far not in place. "

For the Lib Dems, Don Foster said: "This report highlights a number of serious problems, such as the failure by the government to get its figures right to start with.

He added: "It is a major concern that proper monitoring and risk management are still not in place."

Preparations 'on track'

But Olympics Minister Tessa Jowell said "much progress" had been made since the committee's inquiry, including a re-appraisal of costs and an outside expert appointed to head up the Olympic Executive with "decades of experience in controlling costs".

In June the chairman of the International Olympic Committee praised the 2012 preparations as "on time and on track" and said they would prove to be a model for future host cities.

Ms Jowell added: "I will continue to keep an iron grip on the budget and will not hesitate to intervene to keep costs down."

She added organisers had put in place "the most rigorous procedures" and asked the National Audit Office to help monitor costs.

In areas of east London destined to benefit from the legacy of the 2012 Olympic games there are concerns that time is running out for the regeneration plans to be finalised if they are to yield the hoped-for benefits.

When London bid for the 2012 Olympic Games the organisers promised the event wouldn't just bring the greatest sporting show on earth to the capital.

They also pledged it would be a once-in-a-lifetime opportunity to regenerate one of the poorest parts of the city - the East End.

The five London boroughs hosting the Games want, and need, help. In Tower Hamlets, for instance, unemployment is double the national average. There is also a lot of pressure on housing.

Young people 'fearful'

In Hackney, some youth workers have expressed increasing worries about violence on the streets.

Paul Unsworth from Frampton Road Baptist Church Youth Club says many teenagers just do not feel safe any more.

"Young people in this area feel very threatened if they move outside of their own area and out of their own estate because there's different gangs that are around in different areas."

The government has put aside £1.7bn for regeneration in the East End. New jobs, new homes, better transport and better sporting facilities are among the promises. But some experts are warning there is not enough detail in the plans.

For instance, the plans allow for the creation of 9,000 new homes. Of these, 50% are to be at affordable prices. But it has still not been decided where these homes are going or how many in which boroughs.

And that could mean the chance to change the area is ultimately lost, according to Dr Iain McRury who wrote a report on regeneration for the London Assembly.

"There's a crucial window of opportunity in the next six months to a year when those final parts of the plan upon which good legacy depends will be decided and delivered upon.

"We need to see those final little details like the type of housing, the kind of green space, the type of leisure facilities."

Plans 'generic'

Alison Nimmo, the director of regeneration for the Olympic Delivery Authority, says the Games organisers are trying to take on board what local people want.

"We've worked very hard out on the street in east London talking to people, particularly young people, about what their priorities are and we've had a tremendous response and that's really been embedded in a lot of our plans."

But the consultation process is complicated by the sheer number of people, organisations and authorities affected by the Olympics development. And many feel the plans are still quite generic.

Some groups even say that, rather than benefiting from the Games, they are actually losing out.

Johnny Walker from the Hackney and Leyton Sunday League says his teams will lose about 11 of their pitches on Hackney Marshes as car parks are built for the Games.

He is worried that poorer facilities will create more problems for an amateur sport which is already struggling.

"I think it's affecting us at a very bad time when grassroots football is under a lot of pressure and it's not surviving very well. There's lots of football leagues going to the wall, especially Sunday morning leagues and I'm worried we'll be put in danger."

There are still five years to go until the Games, and organisers stress that the East End will benefit from 30 years-worth of regeneration between now and 2012.

But Dr Iain McRury says time is running out if the East End is going to change for the better.

"The people of east London have learned not to get their hopes up too high because sometimes big projects deliver, sometimes they don't and we're hoping that the Olympics doesn't fail because if it does fail it will be failing the people of east London."

5live Report: Olympic Promises is broadcast in two parts at 1030 and 1130 GMT on Sunday 18 November within the Rachel Burden programme or via podcast from the Five Live Report website.

'No black hole'

Mr Purnell said the £9.3bn budget for the Games - nearly four times the estimate that helped win the bid in 2005 - was "robust". He dismissed claims of a £1.1bn "black hole".

The government won the Commons vote by 357 to nine.

The £1.085bn Lottery cash comprises an original allocation of £410m and an extra £675m.

It will be transferred from the Lottery to the Olympic Lottery Distribution Fund in 15 instalments from February 2009 to August 2012.

Challenged over the effect of using cash intended for the arts, sports and charities, Mr Purnell told MPs: "I can confirm today that there will be no further diversion from the Lottery good causes to fund the Olympics."

He also insisted the Olympic budget was not dependent on land sales, stating: "There is no black hole in the Olympic budget."

Shadow culture secretary Jeremy Hunt said: "These concessions are important but they do not undo the main damage of this afternoon's measure, which is that it is an extraordinary way to fund a £9.3bn Olympics budget - to cut budgets for grassroots sport, the very budgets that could provide the sporting legacy which was the big promise of 2012."

The wave-shaped roof will now be 14,000 square feet, which is just over a third of the original 35,000 square feet.

Bob Neill, the Conservative Party's London Assembly Olympics spokesman said the original bid of £75m was "woefully inadequate".

He said: "You can't have much confidence in a system where something is sent back to save costs and ends up tripling it.

"Two years late and massively over budget and of course a far cry from the original design.

"It's a terrible shame for all those who would have used it to train, all those Londoners who were looking forward to swimming there and of course a big disappointment for all of us who are going to pay for it."

Cost agreed

Olympic chiefs said the cost of the venue has been agreed with the government and would not impact the overall £9.3bn budget for London 2012.

However, the final cost of the building would not be released until negotiations with the builders are complete, they said.

Two of the three companies in the running to build the 20,000-seat arena withdrew from the tendering process in November.

After Eiffel and Hochtief decided against making a bid, Balfour Beatty was the only contender.

The committee, whose members are MPs from all parties, commended the progress made by the London Organising Committee (Locog).

'Low bid'?

However, the government's funding and planning of the event came in for heavy criticism.

The MPs expressed "doubts" over whether the organisers would be able to recoup the full £1.8bn they were banking on from the sale of land and property after the event was over.

The priority must now be to keep a lid on the costs and ensure the final bill comes in "comfortably below" the £9.3bn mark, they said.

"Although it is not surprising that early assessments under-estimated the final costs, such a radical revision of cost estimates has been damaging to confidence in the management of the overall programme," they said.

"It has also exposed the government and Games organisers to the charge that the initial bid was kept artificially low in order to win public support."

The committee said that while the aquatics centre "might be spectacular and eye-catching", it also appeared "to be over-designed and will be an expensive way of providing the facilities for water sports needed during and after the Games".

"In our opinion, the history of the aquatics centre shows a risible approach to cost control and that the Games organisers seem to be willing spend money like water."

With more than £3bn built into the overall Games budget to cover contingency costs, any request by the organisers for additional funds would be "a major failure of cost control".

"The priority now should be to keep costs down: the mark of success in financial management of the Games will be to have kept expenditure to a level comfortably below the £9.3bn ceiling," the MPs' said.

John Whittingdale, the committee's Tory chairman, said the National Lottery causes, which lost out as a result of cash being diverted to the Olympics, should have first call on any unspent contingency money.

"We expect that the Games should be delivered comfortably within budget, given that there is a 60% contingency built in," he said.

The MPs expressed concern over the decision to site shooting events at the Royal Artillery Barracks, Woolwich, against the wishes of the sport.

'Double-counting'?

They also felt "disheartened" that ministers had so far failed to provide a nationwide strategy to use the Olympics to promote participation in sport.

The MPs said it may prove "very difficult" to raise £100m from the private sector for elite sport, as the government had required.

A spokesman for the Department for Culture, Media and Sport said it was "pleased" the committee had found much to commend in what has been achieved so far.

But it claimed the committee had "double-counted £500m of contingency funds", adding that "there is no suggestion of the £9.3bn being exceeded".

"We are working tirelessly to plan, prepare and deliver the best Games ever - and to maximise benefits across the country up to 2012 and beyond, which will be spelled out in a detailed Legacy Action Plan," he said.

"The funding package announced in March 2007 remains unchanged and robust and we have rigid cost control measures in place, monitoring progress at every stage of the project."

The spokesman said the overall cost of the venues "has not significantly altered", with the National Audit Office concluding that the budget "represented a significant step forward in putting the Games on a sound financial footing".

Shadow Olympics minister Hugh Robertson added: "The tragedy of all this is that every penny spent financing cost overruns, means less money spent on extending the sports opportunities available to young people."

London 2012 organisers marked the end of the visit by announcing construction has officially started on the Olympic Stadium, three months ahead of schedule.

Funding has been one area of concern for the 2012 Games as has the fact that work on the Olympic Village is due to start next month without a contract with the constructors.

But Oswald says that there are no areas that the IOC should be massively concerned with.

"I have difficulty in finding any area where we have concerns but if we had to mention something which will be challenging it is traffic and transport," he said.

"There will be additional people coming in to watch the Games and going from one place to another will be a challenge but we know LOCOG (the London Organising Committee of the Olympic Games) has made plans already and with the quality of people on board we are confident this will be resolved in a satisfactory manner."

The IOC visited venues including Wembley Stadium on Tuesday and went on to meet the main London 2012 project leaders.

These include London 2012 chairman Lord Sebastian Coe, Olympics minister Tessa Jowell, British Olympic Association chairman Colin Moynihan and ODA chairman John Armitt.

The Commission was also able to meet this week with British Prime Minister Gordon Brown, leader of the opposition David Cameron, Liberal Democrat MP Don Foster, Olympic Minister Tessa Jowell and the newly elected Mayor of London, Boris Johnson.

"The cross party support for the Games and the backing from the highest levels of Government in Great Britain is extremely reassuring," said Oswald

"This strong basis of support for the Olympic and Paralympic Games will be crucial to London 2012 achieving its objectives."

Jowell herself welcomed the IOC report of London's progress.

"I am delighted that the IOC co-ordination commission has recognised the strong progress we have made in our preparations for the 2012 Games," she said.

"The fact that we marked the start of work early on the stadium is a tremendous achievement and is a real indication of our progress.

"We will continue to work tirelessly to ensure that London hosts Olympic and Paralympic Games we can all be proud of."

Lord Coe added: "We take great encouragement from the Commission's comments and the obvious confidence they have in the job we have done so far - they, after all, are the experts."

These are the Aquatics Centre, Olympic Village, Olympic Stadium, the Velodrome and the IBC/MPC, a mixture of permanent and temporary buildings - based in Stratford, east London.

Mr Oswald told a news conference in London: "We can confirm that London 2012 is on the right track.

"We know the world is going through a difficult time but Locog (London Organising Committee of the Olympic Games) had a very strong commercial policy from the beginning and have been able to secure a high amount of sponsorship before the crisis came and have reached £0.5bn."

He said inspectors were "deeply impressed" by the progress made in the construction, and said that the stadium, the Olympic Village and the swimming pool were also impressive.

He also said it was important that the Games' ticketing policy was given attention so that it did not suffer the same mistake as Beijing did regarding empty seats.

Locog has raised nearly £500m from the private sector towards its £2bn budget to stage the Games.

Mr Oswald said it was "important" that the Government had put money into the Olympic Village from the contingency fund so that construction work was not delayed.

Paul Deighton, Locog chief executive, said there were no concerns about the use of the contingency and that only a "small proportion" of it had been used.

He said: "It would be extraordinary if the contingency funds were not used. It is precisely the purpose that the Chancellor put it in place."

Mr Oswald said he might now give London marks that are "very close to 10" for its preparations.