Matthew Beard: City can still deliver safe Games, says IOC chief

"I'm totally distraught," said the bid chief executive Keith Mills. "This goes to underline that no city in the world - even London, which has the best systems in place - is safe from terrorism."

The International Olympic Committee said it was confident the capital could deliver a "secure" Games. The IOC spokeswoman Giselle Davies said: "Security is one of the 17 themes evaluated. Security at Games time is what the IOC worry about. We have full confidence in London as a secure 2012 Games."

The Olympic movement is no stranger to terrorist attacks and an atrocity against Israeli athletes at the 1972 Munich Games caused the biggest crisis in the IOC's history. Last year £800m was spent on security in Athens for the first summer Games after the September 11 attacks.

Athletes - considered the main target - will enjoy a double ring of protection in London, from being housed in a high security village with the Olympic park. Scotland Yard has been involved from the outset in the planning and design of the buildings that will be used for big events, and thereafter remain as a community legacy.

News of the attacks filtered through at the Olympic summit in Singapore shortly before 5pm local time, bringing an abrupt end to what many said had been the best 24 hours of their lives.

Hours before, members of the triumphant London Olympic bid team congregated in the reception of their hotel. There were broad smiles and warm handshakes all round as some boarded a coach for the nearby coastal resort of Sentosa.

On hearing the news, bid team members wandered around, watching the breaking news on television or struggling to make contact with home via a failing mobile phone network.

Lord Coe said: "The entire staff of the London 2012 team are shocked and deeply saddened by today's tragic events in London. Our thoughts are with the families of the bereaved and all those who have been injured in these despicable terrorist attacks."

Jonathan Edwards, the former Olympic triple jump champion and a bid member, said: "We are absolutely committed to delivering a fantastic games. Terrorists are not going to hold our city to ransom. Nonetheless this has been a shock to the system - we have all been up on the clouds but this is the other end of the emotional spectrum."

The London Mayor Ken Livingstone returned on a BA flight to Heathrow last night, having delivered a defiant message in the lobby of the Swissotel before his departure.

"This was not a terrorist attack against the mighty or the powerful, it is not aimed at presidents or prime ministers, it was aimed at ordinary working-class Londoners," said Mr Livingstone.

"That isn't an ideology, it isn't even a perverted faith; it's mass murder. We know what the objective is. They seek to divide London. Innocent people going from all of London's communities have been targeted by this indiscriminate attack. I urge Londoners from all of this city's diverse communities and faiths to support one another and stand together against terrorism."

The key players in London team were due to arrive home at 7am UK time this morning and had made preparations for a welcome party first at the airport and then in Stratford, near the Games site.

Mr Mills said: "At this stage the parties have to be put on one side. It's terribly unfortunate in terms of timing. It's just a terrible tragedy."

The London team is seeking to deliver its pledge to the IOC of having the Games ready in seven years. The first milestone will be reached next week when an Olympic bill is expected to go through Parliament to set up the various bodies responsible for managing the Games.

A priority is the establishment of an Olympic Development Agency which will handle the procurement of infrastructure in the Lower Lea Valley. The foundations have been laid for a £50m aquatic centre and a velopark and hockey pitches are scheduled to be finished by 2007.

A dedicated Olympic lottery scratchcard game, which aims to raise £1.5bn of the total budget of £2.375bn, is key to the bid. The Conservatives are putting pressure on the treasury to exempt the game from tax, which they estimate will earn the government £320m. Another potential sticking point is the relocation of 280 businesses in Marshgate Lane on a 500-acre plot of land within the proposed park. Settlements have been reached with around half.

The bid team will go through a transition stage of around six months before its becomes the London Organising Committee. Run by Lord Coe and his deputy Mills, it will have overall control of the Games and will work in liaison with the IOC to meet the obligations of the host city contract. Much of the existing team is expected to remain in place.

Within Government, Tessa Jowell has been confirmed as Olympics minister. Richard Caborn, sports minister, may be due for a move to the Office of the Deputy Prime Minister, which will handle much of the Games work due to its responsibilities for planning, regeneration and environmental issues.