THE 2012 Olympic village close to the Leyton border will be publically-owned after the government announced £324 million of taxpayers’ money will be spent on the project.

The complex, which is expected to cost £1 billion and will be turned into housing after the games, was initially going to be built by private companies involved in the Stratford City development.

The scheme was then changed to a public-private initiative, but Olympics minister tessa Jowell has announced this has been rejected, saying the deal with Lend Lease and its banking consortium was ‘not a good deal for the taxpayer.’

Ms Jowell promised there would be ‘substantial returns’ from the eventual sales of the flats.

Describing the collapse of the public-private deal as a ‘cause of concern’, shadow Olympics minister Hugh Robertson said the lack of funding “is a direct reflection of the severity of the current economic downturn.”