The Government is set to step in to try to broker a peace deal in the cash row that could mar preparations for the London 2012 Games, British Olympic Association (BOA) chairman Lord Moynihan said today.
The dispute centres on the cut the BOA will receive from any surplus after the Games. They claim the costs of running the Paralympics should not be taken into account.
They decided to ignore an IOC ruling against them and pursue a claim with the Court of Arbitration for Sport (CAS) in Lausanne.
Speaking publicly for the first time since the row broke this month, Lord Moynihan said: "I can report that good progress was made over the weekend and, at our request, the Government has agreed to a meeting to find an amicable resolution to the current contractual dispute."
He was speaking as the BOA announced 27 British Olympic champions will be ambassadors, guides and mentors in the run-up to London 2012 to help British hopefuls prepare for the Games.
The distracting legal action has come at a crucial time in the build-up to the host Olympics. London 2012 is focused on key ticket sales.
No representatives from London 2012 were at the BOA ambassador launch at Tate Modern in central London.
Under an agreement signed in 2005 after London was awarded the Games, the BOA would be entitled to a cut of any profit after 2012, but only after the cost of the Paralympics has been taken away, potentially limiting the amount they will receive.
The BOA is now disputing the contact they signed six years ago and is taking London 2012 to CAS.
Lord Moynihan and BOA chief executive Andy Hunt will not be permitted to take part in any 2012 Olympic board meetings while they are involved in legal action against London 2012, the organising committee.
Lord Moynihan and Hunt remain London 2012 directors and will be able to take part in some meetings, but not board meetings due to a possible conflict of interest.
The International Paralympic Committee chief executive Xavier Gonzalez has accused the BOA of "undermining the vision" of London 2012 as one festival of sport.
It is believed the meeting over the surplus will involve Lord Moynihan and Olympics minister Hugh Robertson tomorrow.
Lord Moynihan will then update the National Olympic Committee and the BOA at a board meeting set for the afternoon.
The row will not damage athletes' preparations for 2012, according to double Olympic champion Dame Kelly Holmes.
She said: "I do not think that the dispute affects anything else. It does not affect the team preparations and it does not effect us as ambassadors.
"It is something that is out of our control. The athletes are concerned about getting support and being the best they can be now and in 2012 - that will not change."
Five-time Olympic rowing champion Sir Steve Redgrave and two-time sailing champion Shirley Robertson are among the BOA ambassadors.
The idea is to create a targeted link between the 550 British athletes at London 2012 and experienced competitors who have succeeded at a previous Games.
A Team 2012 programme, chaired by four-time Olympic rowing champion Sir Matthew Pinsent, is already running to help make business links to support the 1,200 athletes hoping to qualify for the Olympics.
Back-up for Team GB provided by the ambassadors, who are all volunteers, includes a programme to support friends and family of athletes in the lead-up to and during the Games, motivational speaking and answering questions from groups of athletes and sports.
There will be involvement at London 2012 test events, visits to the Team GB preparation camp in Loughborough and maybe being on hand at important moments in the build-up to the Games or to prepare for key events.
The ambassadors will also appear at Team GB fundraising events.
Dame Kelly said: "The athletes are concerned about what it takes to be a world class athlete.
"Our real role will be in passing on our knowledge and experience of what it's like to be at a major championships. The next Olympics is going to be on home turf so you can imagine how overwhelming it will be.
"It will be whatever help we can give. It may be small soundbites or advice to the athletes and their families to alleviate the pressure that the youngsters can face."
Sir Steve said: "I hope I can use my vast experience of competing in the Olympic environment to help prepare members of the team to deal with the pressure, the scrutiny, the highs and the lows.
"But also to make the most of one of the most special moments in their lives - being an Olympian, in front of a home crowd. Hopefully I can help enable them to achieve their dreams, like I did mine."
Olympic champions including swimmers Adrian Moorhouse and Duncan Goodhew, rower James Cracknell, boxer James DeGale, and track and field athletes Darren Campbell, David Hemery, Denise Lewis, Jonathan Edwards, Lynn Davies, Dame Mary Peters, Sally Gunnell and Tessa Sanderson are among the ambassadors.
Winter Olympic gold medallists including Amy Williams, Jayne Torvill, Christopher Dean, Rhona Martin and Robin Cousins will help.
Boxer Amir Khan, athletes Colin Jackson, Steve Backley, Kriss Akabusi and Roger Black, swimmer Sharron Davies and tennis player Tim Henman are also ambassadors.Reuse content