Despite encouraging noises coming from the International Olympic Committee (IOC), who according to Jowell feel that London is "substantially ahead" of other host cities at a similar stage, the negative headlines continued.

Money reared its ugly head with the news that London organisers faced a one billion pounds tax bill because VAT had not been factored in to the original 2.4 billion budget.

It soon became clear that the budget was far from set in stone and the VAT bombshell was followed by an admission from the ODA's acting chairman Roy McNulty that the cost of hosting the Games would rise significantly.

McNulty cited extra security requirements and increased costs of regenerating the site of the Olympic park in east London while it was also revealed that the Treasury wanted a 60 percent contingency fund to cover rising expenditure.

Mayor Livingstone said he would veto any such contingency fund saying it would give developers "a green light to screw up" while headlines quoting final budgets of up to 10 billion pounds have severely undermined public confidence.

Earlier this week, Jowell admitted the cost of simply building the Olympic park and facilities had already soared by 900,000 pounds to 3.3 billion, blaming rising steel and transport prices.

Livingstone added to the sense of confusion when he told BBC radio "nothing's a mess" and that the Games would make a profit, apparently contradicting Jowell.

The ODA, meeanwhile, will re-submit its revised Games budget early in 2007.

Coe has distanced himself from the rows over budgets and claims that rising costs are "inevitable" for a project that will regenerate a huge swathe of east London, provide up to 40,000 new homes and leave long-lasting benefits.

The chief executive of the ODA, David Higgins, who was also involved with the Sydney Olympics, has hit back at raft of negative media coverage, saying this week that London would witness the biggest regeneration project in Europe and that London 2012 would be remembered as the 'Regeneration Games'.

The ODA also announced that work to clean up the Olympic site, still dotted with unexploded World War II bombs, would begin a month ahead of schedule in December.

London's progress will no doubt be a hot topic at the IOC's Executive Board meetings in Kuwait next week and some praise from president Jacques Rogge would be a shot in the arm.

However, until the gleaming new sports facilities start springing up in the wastelands of east London, 2012 organisers can only batten down the hatches and ride out thestorm.

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