Organisers of the London 2012 Games have had a £225m loan from the public sector approved, which could go towards helping to build the Olympic Village.

The Olympic Delivery Authority (ODA) said it has yet to decide if it will accept the public sector European Investment Bank’s offer.

The government had hoped the private sector would raise the £1bn needed for the village’s construction.

The ODA has said the recession has made raising private finance difficult.

In September it said it had secured only half of the money needed for the athletes’ village and media centre in Stratford, east London.

Athletes will stay in the 3,000-home Olympic Village - the biggest component of the 500-acre Olympic Park - which is being built by Australian firm Lend Lease.

A spokesman for the ODA said: "As we have made clear in recent months, discussions on potential funding of the Olympic Village involve both affordable housing and private sector development.

"We have said that the European Investment Bank could be a funding source for the affordable housing.

"Alongside this, discussions are continuing with Lend Lease over the wider Olympic Village development.

"We expect talks to have concluded this summer."

‘Harsh terms’