The village will house athletes during the 2012 Games
The economic downturn has made it difficult to secure funding for the 2012 Olympic Village, the Olympic Delivery Authority (ODA) has said.
So far it has secured only half of £1bn needed for the athletes' village and media centre in Stratford, east London, ODA chairman John Armitt said.
The remaining £500m may come from a contingency fund but the Games would not exceed its £9.3bn budget, he said.
Mr Armitt said funding was "more difficult" but "we are on schedule".
Athletes will stay in the 3,000-home Olympic Village during the 2012 games - the biggest component of the 500-acre Olympic Park - which is being built by Australian firm Lend Lease.
In addition the media centre will house 20,000 broadcasters, photographers and journalists.
Mr Armitt said the ODA had originally expected to already have "quite big sums of private sector funding" for the village and media centre.
"The consequence of what is happening in the markets means that the availability of funding is more difficult," he said.
"That is not to say that it is not available but, if it is available, it is available on harsh terms."
The ODA expects further deals to be struck by the end of 2008 but it will make up the shortfall from its contingency fund.
Mr Armitt said the fund "was designed for major unexpected circumstances - and this clearly counts as that".
After the Games the village will become part of the overall Stratford City regeneration scheme, which will include a shopping centre and up to 3,300 new homes.
The original budget for the 2012 Olympics was £3.4bn but this was increased to £9.3bn last year.