Ms Tessa Jowell said the games were 'economic gold at a time of economic need', adding they had unexpectedly become 'an economic stabilisation programme'.
'It's six billion pounds (S$14.3 billion) of investment in 75,000 contracts to firms all over Britain', she told The Times newspaper.
'There will be new jobs, new homes. Nobody intended it to have this function, but this is the effect.'
She also accepted that private sector backing for the games had been hit by the economic situation.
'There is certainly less private sector equity borrowing available both for the Olympic village and the media centre,' she said. 'We have to make sure that the construction continues.'
Ms Jowell also vowed that there would be no overall cuts despite the current economic condition, adding: 'No one is going to want to get to 2012 and think 'this is really tatty'. We have taken a decision to do the best games we can.'
Both Prime Minister Gordon Brown and the Governor of the Bank of England Mervyn King said this week it was likely that Britain would enter recession.
Official data released on Friday said the economy contracted by 0.5 per cent in the three months to September for the first time since 1992.
A recession is defined as two consecutive quarters of contraction.
The overall budget for the London games is 9.3 billion pounds, up from 3.4 billion pounds when it won the bid in 2005. -- AFP