The BBC has learned that operating costs for the event are now estimated at £85m, with income from TV and sponsorship agreements likely to come to no more than £55m - and the figure could even be as low as £35m.

Charles Lambert told Radio 5 Live that Games chiefs were warned earlier this year that costs were rising sharply, while projected income was spiralling downwards.

Charles Lambert 'Still time to retrieve the situation' (BBC Radio 5 Live)

But Robert Hough, the head of Manchester 2002, said he had no evidence of major cash problems.

He insisted that current projections did not indicate a deficit of the magnitude being suggested.

Almost impossible to break even

Sir Bob Scott, who led Manchester's successful bid after failing to win the 2000 Olympics, promised in 1995 that the Games would break even.

Sir Bob Scott 'The Games will be safe in our hands'

But the original operating budget of £56m has never been officially revised.

Professor Chris Gratton, director of the leisure industry reearch centre at Hallam University in Sheffield, said: "It's almost impossible to either break even or make a profit at major sports events.

"There are exceptions to this, I think Euro 96, the World Cup, Olympics, are probably three events that might be exceptional, but it's very, very difficult even then to disentangle the real profit or loss account from all the different revenue sources and the total cost of running such an event."

City councillor Simon Ashley 'I am concerned'

He has been studying the finances of major sporting events since the 1991 World Student Games in Sheffield, which resulted in a £10m loss which had to be met by local tax payers.