It was hoped that £100m, split into five annual payments of £20m, would be found from the private sector, but sponsorship specialists appointed by the Culture Secretary Andy Burnham have failed to find any potential sponsors to invest the money.
The news of sponsorship challenges comes as the Chartered Institute of Marketing argues in a new paper that the government, the Olympic movement and big companies are acting to restrict access to marketing and sponsorship opportunities to a select few.
The Government is now banking on businesses coming on board following Britain's winning run in Beijing - bringing home 12 gold medals so far, its biggest medal haul in a century.
The credit crunch is partly to blame for the shortfall, with the money that is available going into the £650m sponsorship pot for the Games itself because the potential returns are more evident.
When he was Chancellor, Gordon Brown announced in the 2006 Budget a public investment of £500m in sport for 2012 - with the rider that a further £100m in sponsorship would be found.
Lottery distributor Camelot is already contributing £300m to 2012, while £200m is coming from the taxpayer.
Ministers have also verbally agreed to honour another £21m, but there still remains a shortfall of £79m and sources fear it is a big enough sum to have a negative impact on most of the 26 sports to be publicly funded.
Lord Moynihan, chairman of the British Olympic Association, said this week he believed the Prime Minister would confirm the funding pledge he made when he was Chancellor.
"That's what we expect and I'm sure he's a man of his word," said Moynihan.
UK Sport chief executive John Steele added that the sports funding body would need a decision on funding levels in the next two months ahead of finalising spending plans in December.
The news comes as CIM's new agenda paper, 'The event that dare not speak its name – marketing the 2012 Olympics', looks at how UK businesses can benefit from the Games.
The CIM argues that the Olympic movement, the Government and big corporations are seemingly determined to keep marketing and sponsorship opportunities in the hands of a select few.
Its paper asks whether UK marketers will see any benefits from this spectacular sporting event. The paper also looks at the legal restrictions on advertising connected with the Games and what opportunities remain for organisations to get involved.
David Thorp, director of research and information at The Institute, said: "Although the 2012 Olympic Games will primarily be based in London, businesses across the country can benefit from this fantastic showcase for the UK, and marketers should be looking now for opportunities to get involved and profit from massive investment government has made in the Games."
It is the first time that The Institute has taken its agenda papers around the country as part of a national roadshow. Every six months The Institute produces an agenda paper, looking at major topics for marketing professionals.