Mayor of London Boris Johnson has told the BBC he is "absolutely determined" the 2012 Olympics will cost less than the current £9.3bn budget.
Mr Johnson, who is in China on an official visit to the Beijing Games, said British and London taxpayers would "not pay a penny more".
His team was working on ways of economising without jeopardising the "legacy value" of the event, he added.
But Olympic bosses said London still had to ensure the welfare of athletes.
Asked whether 2012 would be the "austerity games", Mr Johnson conceded that the Chinese had put on "absolutely fantastic games" and that they had "set the bar high".
"I think with British ingenuity, wit and... resourcefulness we are going to produce a games - an opening ceremony, a closing ceremony and all the stuff in between - that is going to be in our own sweet way just as fantastic," he told BBC2's Newsnight.
"I am absolutely determined to make sure that we come in under the £9.3bn"
The original budget for the London Olympics in 2005 was £3.4bn, but was increased to £9.3bn last year. More than £2bn comes from Lottery funding, more than £1bn from London council tax payers and £6bn from Whitehall.
Mr Johnson said his team was currently economising and "finding ways of moving things around" and that the budget figure had "a couple of billion built in as contingency".
"I am absolutely determined to make sure that we come in under the £9.3bn. I have no reason to think that we will have any difficulty in doing that," he said.
He added: "I will ensure that London taxpayers and indeed British taxpayers do not pay a penny more."
Mr Johnson confirmed that security in 2012 would be a "big spend", but he dismissed a price tag of £1bn, saying he had seen a figure of £600m.
'Wonderful Games'
Mr Johnson also said the loss of three senior officials from his administration in three months would not affect the delivery of the Olympics.
"We are going to have a wonderful games and I can assure you all my team is working very hard to make sure that we protect value for London taxpayers and that people coming to London will enjoy themselves," he said.
Mark Wallace, of the Taxpayers' Alliance, said he welcomed the fact that organisers were being strict with budgets.
"We do need to be firm on this. We can't allow the Olympic Delivery Authority, or whoever else involved with the Games, simply to try and hold taxpayers to ransom."
But Jacques Rogge, president of the International Olympic Committee, said London still had to deliver as well as China with regard to the quality of the Olympic village, venues and transport.
"The Games are for the athletes, the Games are not for London, the Games are not for Great Britain," he added.
But Mr Johnson told BBC News athletes would not be "short-changed" at London 2012.
"They are going to have a fantastic Olympic village in which to spend their time during the Games," he said.
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"In the long term, those 3,000 units we are building in east London are going to be a vital part of the legacy we want to see out of the Olympic Games. That's why it would be completely senseless to economise."
He added that the world had been gripped by "Olympo fever" and he is certain London 2012 will be "fantabulous".
Mr Johnson has been defending his decision not to discuss human rights in talks with Chinese authorities during his trip.
He said it would have been "deeply counterproductive" to "showboat" and grab UK headlines at a time when China was opening up to the world.
Instead, the Beijing Games should be used to encourage better understanding between China and the rest of the world, he added.
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