Tessa Jowell and Ken Livingston insist Olympic Park land will be sold for £1.8bn after the games, despite bleak property market forecasts

The government has denies claims that Britain faces a £1bn black hole after the 2012 Olympics because of “ludicrous” property price projections.

Tessa Jowell and Ken Livingstone have said they will be able to make £1.8bn through the sale of land at the Olympic Park after the games.

But a report in The Times said this figure, which is based on a 16% per annum increase in land prices over the next 15-20 years, is overly optimistic.

It said a report from the London Development Agency showed just £800m would be raised if prices rose by 6%. Some agents have said the increase may only be around 4-5% in light of bleak forecasts for the property market.

The Department for Culture, Media and Sport (DCMS) refused to admit it had overestimated potential sales.

A spokesman said: “There is absolutely no black hole in the 2012 finances, and these claims are completely misleading and a distortion of the facts.”

Neale Coleman, the Mayor of London’s director of business, planning and regeneration, also hit out against the reports, calling them “inaccurate”.

Speaking at a Culture, Media and Sport select committee meeting today he told MPs the £800m figure was “very, very cautious”.

He said: “The LDA has suggested a range from £800m to £3bn. If land values increase in the next 20 years as they have over the last 20 years, we will generate not £1.8bn but £3bn.

“£1.8bn is not an unrealistic figure. I would anticipate this will be met and exceeded.”

Coleman added that the estimates concerned had been made before the government decision to provide funding for Crossrail, a commitment he said would have a “major effect” on increasing land values in the area.

But Nigel Evans MP expressed frustration that the projections for land sales were so vague.

He said: “None of us round the table will be here in 20 years time to say whether you are right or wrong. When we started the overall budget was £2.8bn, now it is approaching £10bn. You can see why we are so keen to get as exact figures as we can from the different bodies.”