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Culture Media and Sport Secretary Tessa Jowell ended months of speculation by announcing the British Government would "pull out all the stops" to help London's bid to host the Games for the first time since 1948.

She announced that the �2.375bn cost of staging the games would be largely met by a new Olympic lottery game and a �20 increase for London council tax payers.

Ms Jowell said a bid would be "good for sport, good for London and good for the whole of the United Kingdom".

Olympics 'will benefit entire UK'

International Olympic Committee president Jacques Rogge said London would be a front runner if it "tackled the challenge well".

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"The IOC would want the best possible candidate cities and London has all the qualities needed," he added.

Several other cities have already expressed their interest - New York, Madrid, Moscow and Havana are in the running.

But the biggest challenge to London's hopes could come from Paris, where an announcement of a bid is expected in June.

All final applications must be made to the International Olympic Committee (IOC) by 15 July.

The IOC executive board will decide in May or June 2004 which of the candidates has been accepted when bidding cities have to pay another �300,000 to stay in the race.

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After an evaluation commission survey, the IOC will announce in May 2005 which cities will go into the final election in Singapore on 6 July 2005.

London would need a new stadium and Olympic village, to be sited in the east of the city, and transport links would also have to be upgraded by 2012, which is also the Queen's Diamond Jubilee year.

The Football Association has also offered the new Wembley Stadium for a variety of uses, including as a possible centrepiece venue.

The British Olympic Association has invited owners of 48 football and rugby grounds across the UK to express an interest in being one of six stadia which could be involved in hosting the Olympic football tournament.

Tessa Jowell said the �2.375bn cost of staging the games will be met by

• �625m raised by increasing London council tax bills by �20

• �250m from the London Development Agency

• �1.5bn from a range of new Olympic lottery games and from existing lottery funds

"The Olympics are not just the greatest show on earth. They will help to revitalise East London," said Ms Jowell.

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"And they will inspire and enthuse a generation of young people."

London Mayor Ken Livingstone also gave his full backing to the bid, and said he was now "only interested in winning, and securing the deal for London".

"I think we will," he added.

The search is now underway for a leading person to front the �17m campaign, and Livingstone said they would name someone of "international" standing.