Ministers are preparing a £100 million bailout fund to help to train Olympic athletes after the credit crunch put an end to hopes of finding the money from private business, The Times has learnt. UK Sport, the elite funding agency, is understood to have received private assurances that the Government will step in to plug the hole in a five-year £600 million package agreed in 2006 by Gordon Brown when he was Chancellor.

The Treasury had originally insisted that 15 per cent of the record deal for sport, in which the Lottery would provide £300 million and the Exchequer £200 million, should come from commercial sponsorship. While the hope is that business can still help, the realistic expectation is that the taxpayer will have to find most of the shortfall. The cost of hosting the Games stands at £9.3 billion.

Fast Track, the leading sports marketing agency founded by Alan Pascoe, the former Olympic athlete, was appointed two months ago to find the “missing” £100 million, but its task has been made more difficult by the global credit crunch.

The move by the Department for Culture, Media and Sport (DCMS) to guarantee the first tranche of £20 million after the Beijing Games in August is a tacit admission that creative attempts to raise it from the private sector are thought likely to fail. It also means that UK Sport has the financial certainty to allocate grants in its 2009-2013 funding cycle. It will agree in principle the money for individual sports immediately after Beijing.

The performance of athletes this summer will influence funding levels for London 2012, with Treasury officials prone to analysing the cost of each gold medal. This will increase the pressure on Great Britain to improve on their haul of nine in Athens, where they finished tenth in the medals table. The target for 2012 is fourth place. UK Sport will next week announce its exact medals target for Beijing, where it hopes to finish eighth.

A DCMS spokesman said: “The Government is completely committed to supporting our elite athletes in the run-up to London 2012 and beyond. Raising £100 million from the private sector remains the target we are focused on.”

One plan to ask entrepreneurs such as Sir Philip Green and Sir Richard Branson for personal donations has been shelved. Fast Track still has other ideas, around the “money can't buy” concept of being associated with athletes competing at a home Games. But progress is being hampered by its lack of commercial rights. Most reside with the London Organising Committee of the Olympic Games, which aims to raise £650 million from sponsors. It has already secured £350 million from companies, including Lloyds TSB, British Airways and adidas.

UK Sport has only three days a year of contractual access to each athlete it funds. “It was always going to be a difficult sell because there was not much substance to sell,” one industry source said. “In a tough economic market, it's doubly difficult.”