The bill for the 2012 Olympic Games and associated regeneration work could exceed £9bn, Tessa Jowell has announced.

At the time of Britain's Olympic bid, funding was put at about £3bn, with another £1bn for regeneration of the east London area.

The cost of the Olympic Park and venues has since risen to £5.3bn, while there will also be a £2.7bn contingency fund.

Other measures including security and VAT mean the total estimated budget is now £9.3bn.

The Olympic Delivery Authority, which will manage the structural and regeneration projects, will now have a budget of £5.3bn up to 2012.

This includes £3.1bn for the Olympic parks and venues, £1.7bn for regeneration and infrastructure and a £500m allowance for unexpected costs.

The culture secretary confirmed that 2004 budget estimates had excluded tax, which would now have to be paid.

"The ODA will pay tax, but the costs of this at around £840m will be covered in full by the government contribution," Jowell said.

Jowell said that a wider contingency of £2.7bn, including the £500m ODA contingency, would be managed by the government.

Some £600m has also been allocated to "wider security" on top of ODA spending on site security.

And around £390m will be invested in areas such as community sports coaches and in the Paralympic Games.

That means central government provision will be £6bn, including £1bn for regeneration, the funding of the tax bill, infrastructure, wider security and contingencies.

Londoners will pay an extra £300m on top of the £875m previously planned, although that will not come in the form of higher taxes or transport fares.

And an extra £675m will come from the Lottery, bringing its contribution to £2.2bn.

That will come in the form of £425m from the Big Lottery Fund after 2009 and £250m from other good causes excluding UK Sport.

"This decision to take a further share from the Lottery has only been taken after very careful consideration," said Jowell.

Visiting a sports centre in west London, Tony Blair said the core Olympic budget "doesn't move a great deal".

"There is a lot of alarmist stuff about this. We have an Olympic budget. At the end of the day, the thing to remember is that the money we are investing in the Olympics is money for the country," he said.

"For example, we are putting money into homes, sporting venues and in schools - all these things are going to be good for the country, not just London but countrywide."