A deal has been agreed "in principle" for badminton and rhythmic gymnastics to be based at Wembley Arena for the 2012 Olympic Games.

It would avert the need for a £40million temporary venue.

The deal, if finally rubber-stamped by the sports, will see athletes offered hotel rooms within walking distance of Wembley for the duration of competition to avoid lengthy trips from the Olympic Village in east London.

The agreement was revealed by Denis Oswald, chairman of the International Olympic Committee's co-ordination commission at the end of a two-day inspection of London's preparations. The Badminton World Federation's council are due to meet in Bali tomorrow to discuss the issue.

Oswald told a news conference: "Proposals have been made to use Wembley, an existing facility rather than building a temporary venue in the park.

"There is some saving to make - the two federations have been very co-operative and understand it was wise to look for a cheaper solution.

"They have to take care of their athletes so it's important the time between venue and village is not too long and that there is somewhere close where athletes can stay during competition and not have to go back next to the village

"LOCOG has made proposals in that direction, which have been agreed in principle by the two federations.

"It still has to be finalised but we have no doubt this situation will be finally resolved in the coming few weeks."

Oswald came to London's defence when it was suggested they had reneged on their bid promise for athletes to "compete and not commute", saying that the global financial crisis had caused exceptional circumstances.

He added: "I don't think we can say London went back on their promise. The two venues are exceptions and we should not forget that training facilities are all very close [to the Village] and athletes spend 90-95% of the time training rather than competing.

"If in two sports the athletes have to travel a little further than expected and can walk from a hotel to the venue I don't think it can be an issue.

"We just hope we won't have a world financial crisis every four years."

When asked if London had gone back on their word, 2012 chairman Sebastian Coe said: "Unequivocally no."

He added that discussions were still continuing on the transport and accommodation details. A final decision is expected early in the new year.

London mayor Boris Johnson said: "I am pleased and thank the two federations for understanding our concerns to save money wherever we can in these tough economic circumstances."

Oswald said the inspection overall had been very positive and that significant advances had been made since the IOC's last visit in April.

He added: "With less than 1,000 days to go until the opening ceremony of the Games we have been hearing about the advances made by LOCOG in the last few months.

"A lot of work has been done since we were here last time, this is very positive and we really start feeling the Games are taking shape.

"London is on track to deliver an excellent Games."

Oswald said London had included a number of lessons learned from Beijing, one of them being ways to optimise the number of seats being filled in venues by having shorter sessions and where possible using a ticket exchange system similar to Wimbledon tennis.

London 2012 chief executive Paul Deighton said: "Wimbledon is a great system where they zap the ticket on the way out and re-sell - a brilliant way of keeping the stadium full and that's one of our top objectives for 2012 - keep those stadia full."