An extra £342 million in public funds has been pumped into the Olympic Village project, meaning the venue will now be publicly-owned.

Before the investment was announced, the £1bn village - which now includes 2,800 apartments – was a privately funded project, and was later switched to a public-private proposal.

However, since the downturn in the economy, the public sector has been required to take on an increased level of risk, the Department for Culture, Media and Sport has confirmed.

Lend Lease and its banking consortium had been offering £150m in equity and £225m of bank debt to finance part of the construction and development costs of the deal. However, this was rejected due to risks associated with a private funding package.

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Today's decision means that nearly a third of the way through the programme, just under £1.3 billion of the £2 billion of the contingency fund available to the ODA remains unspent.

It was also confirmed that, as planned, agreement has been reached in principle for a further £268 million to be invested into the Village through the pre-sale deal for affordable housing with Triathlon Homes. This funding is separate to the Olympic budget.

Olympics Minister Tessa Jowell had rejected private funding as not being a "good deal" for the British taxpayer.

"A private sector deal was available, but because of the credit crunch it was not a good deal. By funding the entire project, the village will become publicly-owned and the public purse will receive substantial returns from sales," Ms Jowell said.

The Government confirmed the money would be paid back after the flats were sold.

The Olympics Minister also said the Olympic Delivery Authority (ODA) may pursue deals from investors when the sire is nearly finished, however, this would be dependant on the economic climate.

Shadow Olympics Minister Hugh Robertson has slammed the decision as being a "cause for concern".

He added: "The lack of private-sector funding for the athletes’ village is a direct reflection of the severity of the current economic downturn.

"As soon as markets improve, it must be sold to the private sector and today’s outlay recouped for the taxpayer."

(JM/BMcC)