British Olympic Association chairman Lord Moynihan and chief executive Andy Hunt have been suspended from the board of Locog - the London 2012 organising committee - following the legal row over the financial surplus from the Games, the BBC has learned.
Locog has suspended them because of a conflict of interest and both Lord Moynihan and Hunt did not attend a meeting of the board on Thursday.
The BOA has been invited to nominate replacements until the case, which is to be considered by the Court of Arbitration for Sport, is resolved.
But by suspending the pair Locog is sending the clearest indication yet of the seriousness of the dispute which is overshadowing London's preparations.
A Locog spokeswoman said: "Colin Moynihan and Andy Hunt remain directors of Locog.
"The Locog board has decided to exclude them from board meetings whilst they are individually and actively involved in pursuing a dispute against Locog.
"Both have been invited to send alternate representatives to board meetings. The BOA is ably represented on the Locog board by HRH the Princess Royal, Sir Craig Reedie, Sir Philip Craven and Adam Pengilly."
The BOA said it would not be taking similar action to Locog.
A BOA statement said: "With respect to the British Olympic Association board of directors, we do not feel a similar action is necessary and we are not taking the same steps as Locog.
"We continue to welcome British International Olympic Committee members, all of whom are Locog directors, and their contributions in the interests of the athletes and the success of the Games.
"This decision by Locog will have no bearing on our primary responsibility, which is to prepare Team GB for the London 2012 Olympic Games."
Meanwhile, in a separate development, the International Paralympic Committee has accused the BOA of undermining its vision for London 2012.
The BOA claims that the Paralympics will make a substantial loss.
The IPC's chief executive, Xavier Gonzalez, has written a letter to a number of newspaper sports editors criticising the BOA.
The BOA is entitled to 20% of any surplus from London 2012 and wants its share to be paid before the Paralympics are taken into account.
It has taken its dispute about who should pay for the Paralympics to the Court of Arbitration for Sport.
In the letter Gonzalez says that the Paralympics will not make a loss. His projections are in line with those of staff at London 2012, who predict that the Paralympics could make a profit of around £10m.
If that is the case then the hearing at the Court of Arbitration for Sport would be pointless, as the BOA would actually stand to make more money by taking its share of a combined surplus for the Olympics and Paralympics.
Gonzalez wrote: "In 2005 the vision for London 2012 was for one festival of sport, with an integrated Olympic and Paralympic Games, underpinned by a single budget.
"It is very disappointing that this vision is being undermined by the BOA."
This intervention by the IPC is a clear attempt to increase the pressure on the BOA chairman Lord Moynihan to back down.
On Wednesday Lord Moynihan told a BOA board meeting that he was determined to press on with the action against the London 2012 Organising Committee despite accusations that he is damaging crucial relationships within the Olympic movement, little more than a year before the Olympics begin.
The BBC revealed on Wednesday that Lord Moynihan will face a vote of no confidence if the BOA is defeated at the Court of Arbitration for Sport.