The increase in costs was blamed on the doubling in the price of steel and a decision to revise transport costs to take into account inflation in the run-up to 2012.
"An additional cost of 400 million (pounds), not included in the original bid, is in order to fund the delivery partner whose overriding responsibility is to ensure the costs of the Games are kept on budget and that the timescales are kept," Jowell said in parliament.
Jowell said it was likely the increase in cost would be met by a combination of London council taxpayers and Lottery games.