Already, the size of the athletes' village has had to be pared down. Plans to erect temporary sporting venues might be scrapped. And the government was forced to hollow £95 million out its contingency fund of £2.2 billion, out of a total Olympic budget of £9.3 billion, as some of the private financing failed to come through.

The credit crunch could have a silver lining for hard-pressed organizers of the London 2012 Olympics, who can now scale back their grand designs and hope for the blessing of the public and the International Olympic Committee. The rationing and homemade equipment of 1948, when war-weary London's Olympics were dubbed the 'Austerity Games,' will not be necessary, but 2012 will not offer the eye-catching structures of Beijing.

Flat-pack stadiums are likely to be the order of the day, while several of the planned temporary venues could be scrapped for existing buildings in an effort to stay within the £9.3 billion, or $16.3 billion, budget.

Chris Higson, professor of accounting at the London Business School, said the crisis provided the opportunity to pare down ambitions "without losing face."

On Wednesday, British cabinet ministers met, primarily to discuss security for 2012, but finance was also likely to be part of the debate, given the growing concerns surrounding the country's ability to bankroll an Olympics.

Fencing has already been moved to a shared venue. The shooting, basketball and equestrian sites are under review.

"Clearly in the current economic climate it is prudent to look at our temporary venues to see what other alternatives may exist using permanent structures. This process is under way," a statement from organizers said Tues day. The biggest concerns surround two public-private sector projects in the Olympic Park: the estimated £1 billion athletes' village and the £400 million media center.

An inability to secure bank loans could result in a shortfall of up to £250 million, the Olympic authorities said. The slump in property prices, which could damage the chances of recouping money from the athletes' village after the Games, has also resulted in the number of post-Olympics apartments being reduced from 4,200 to 3,000.

Lend Lease, an Australian developer which is building the athletes' village, said there had been delays in securing financing, but said it expected to finalize arrangements by the end of the year. "Lend Lease's equity contribution is subject to this funding being in place, " it warned in a statement in June. Failure to secure the funds could result in the village being nationalized.

The deal with the private sector to build the media and broadcast center is also in doubt. The 1.3 million square-foot, or 120,000 square-meter, area may have to be scaled back after the Games because an anchor tenant cannot be found.

The economic downturn could allow the government to play hardball with the IOC over the scale of the Games and the contractors over price, Higson said. Steel and commodity prices are falling and labor costs may no longer be at such a high premium, he added. He said the Olympics provides an opportunity to energize the labor market. "We do not know what the real impact of the credit crunch will be with the economy, though past experience shows it will be severe, but you could argue it is the classic prescription for Keynesian economics - large public work projects at a time of unemployment."

The Greater London Authority has escaped the banking crisis in Iceland, unlike dozens of other British local councils. But the Metropolitan Police Authority said it has £30 million of deposits in a collapsed bank, though a spokesman said Olympic security would not be affected.

The operational cost of the Games is to be met by a private sector budget of £2 billion, £650 million of which is to come from London's domestic sponsors. The London Organizing Committee said companies had not been put off by the credit crisis, with more than £400 million having been raised so far.

"Since Beijing there has been a large amount of interest," a spokeswoman said. "Companies have seen what a positive impact the Games can have." One sponsor, Lloyds, which said Monday that it would take billions of pounds in a government financial bailout, also said the financial environment " reinforces our commitment" to the Games.