GRASSROOTS sport in the North-East could lose up to £6m in National Lottery funding because of the soaring costs of the 2012 Olympics.

The Government has been accused of raiding the lottery to pay for the Olympics after it announced the cost for the games has risen to £9.325bn.

Community sports workers in the region have labelled the situation "scandalous" because an extra £675m will come from the lottery.

This will include an extra £55.9m of Sport England's income, which is divided among nine regions, including the North-East.

Sport England has already pledged £339m to the London games.

Last night, former professional footballer Paul Bielby, from Darlington, attacked the decision to ask for even more funding from the lottery.

Mr Bielby, who runs a series of youth football coaching academies, said: "It is absolutely scandalous how it has escalated this much at this stage - so soon after winning the bid.

"It's obvious it's going to escalate even more.

"We can't afford to lose more money for sport in the North-East."

Sport England distributes lottery cash to sustain and increase participation in community sports.

Although it supports the Olympics, it has said this decision could reduce the amount of people participating in sport by 2012 by nearly 200,000.

Judith Rasmussen, the North-East regional director of Sport England, said: "Clearly, the money that Sport England is going to lose - £55.9million - that will potentially have an impact on our slice of funding. It's impossible to say the overall effect.

"We are disappointed, but we're trying to think of it positively.

"The Olympics are a tremendously rare opportunity to attract investment into sport."

The increased costs include a £2.7bn contingency fund and £600m for security, as well as an £840m VAT bill that the Government will cover.

Construction costs for the Olympic Park and venues have also risen to £5.3bn. The lottery's total contribution will be £2.2bn.

Shadow Olympics Minister Hugh Robertson protested that there had been a trebling of the budget in less than a year.

He said: "In raiding the lottery for a further £675m to make up the shortfall, the Government will penalise precisely the clubs and small organisations up and down the country that were supposed to benefit from the Olympics."

Sport England chairman Derek Mapp said this latest decision was a "cut too far" and "seriously endangers the creation of a sporting legacy from the 2012 Games".

He said: "Unless new funding is secured, we will have to reduce our 2012 ambition of increasing participation across two million people. We estimate that the best-case scenario would result in 186,000 fewer people doing sport.

"Given the partnership funding we lever in, the true reduction to the ambition is likely to be significantly higher."

The initial estimate for the cost of the Games was £2.4bn.

Culture Secretary Tessa Jowell said she planned to transfer £425m from the Big Lottery Fund and £250m from other good causes after 2009.