Newham Council has admitted that the £40million loan to help Premier League club West Ham move into the Olympic Stadium may never be repaid.
The east London borough said the loan was 'damaged' and not currently being paid off because the stadium was failing to make a profit.
Newham stressed the loan had not been 'written off' but appear to give up any hope of getting back the cash.
The admission has sparked concern from councillors and residents as the borough, one of the most deprived in the country, faces further austerity.