British Olympic chiefs had been waiting for Friday's decision by the International Olympic Committee (IOC) before deciding whether to proceed towards a bid or abandon the idea altogether.

If Paris had won, there would have been no point in London bidding for the following Games.

Athens will host the 2004 Olympics and the IOC would not acccept three consecutive summer Games in Europe.

But with Paris missing out the British Olympic Association (BOA) is ready to take the next step towards securing the Olympics for London for the first time since the 'austerity games' of 1948.

BOA chief executive Simon Clegg said: "It opens up Europe for 2012 on the basis that Africa will get the 2010 World Cup.

"The 2002 Winter Games are in Salt Lake City and, after the problems experienced in Atlanta, there is a reluctance to go back to America."

A 2012 bid would involve the BOA, the Government and the Mayor of London, Ken Livingstone.

Clegg said: "Before we decide to bid or not, we have to make sure we know the crucial questions we must ask ourselves. The Government appears to understand this.

"A London bid would rely on the absolute backing of the Government and Greater London Authority.

"We are in discussion with both. The next meeting is coming up shortly but it will be the beginning of next year, at the earliest, before we know if we are in a position to mount a British bid."

The BOA has already drawn up a feasibility study detailing possible venues.

Detailed study

One proposal includes an 80,000-seater stadium and Olympic village at Stratford, near Hackney in east London.

The Government have indicated they want a more detailed study.

New Sports Minister Richard Caborn is anxious that sports facilities are built because they are needed, not just to service a one-off event.

Clegg met Caborn last week and received assurances the BOA would be given the money they need to pay for further research.

If a decision is made to bid for the games it would be likely to cost at least �30m - the smallest amount spent by any of the cities bidding for the 2008 games - and would have to be submitted by January 2004.