Tourists are steering clear of London because of the Olympic "upheaval", the Culture Secretary Jeremy Hunt has admitted.
But the Government is refusing to downgrade David Cameron's prediction that the Games will provide a £13bn boost for the UK economy.
West End retailers, theatres and restaurants say warnings of transport chaos have deterred tourists and locals, turning London into a "ghost town". Mr Hunt said he was now expecting "just under 750,000 additional visitors" during the six weeks spanning the Olympics and Paralympics.
Some potential visitors have been put off, the minister responsible for tourism acknowledged. "There are [far] fewer European tour groups, probably accentuated by the euro crisis," Mr Hunt said. "Some tourist groups stay away from an Olympic host city because the logistics are so much harder. On the other hand, we get a lot of new visitors who come to spend money in different ways."
Mr Hunt's department has put together what he calls "the biggest-ever tourism marketing campaign". "Our target is an additional 4.5 million visitors in four years," he said.
He said he was not disappointed by reports of empty streets and a dramatic fall in trade since the Games began. "It is very difficult to predict what will actually happen to consumer spending in one part of London during something like an Olympic Games because the upheaval is so huge," he said.
Figures released yesterday by Locog suggest that nearly one in five motorists had abandoned the roads, with the overall flow of vehicles falling by 17 per cent since the Games began.