Tate Modern's extension delayed due to funding issues

The Tate Modern extension will not be fully open in time for the 2012 Olympics, with £64m still needed to complete the project.

Tate bosses said they had raised "70% of the total funds" and were confident the rest of the £215m will be found.

The first phase of the development - one of the most ambitious fund-raising projects in the art world - will open on schedule next summer.

The second phase is now expected to be completed in 2016.

"We will raise this money," said Lord Browne, Chairman of the Tate Trustees.

An artist's impression of what the space will look like in side the east oil tank

He said that that work on the 11-storey structure was continuing "in bits and pieces... to make sure that we are sufficiently prudent".

"If we do not raise another penny, we can stop and wait," Lord Browne explained.

Last year the gallery's Government funding was cut by 15%, although Chancellor George Osborne pledged continuing support for the extension.

"We are being very prudent but I do believe that, based on our assessment of people, their interest and the success of Tate Modern, which has been built over many years, people want to see it work," Lord Browne said.

The first phase of the new development will be part of the Cultural Olympiad - the UK-wide festival of the arts, timed to coincide with next year's Olympic Games.

It will include the opening of the former power station's oil tanks, three cavernous subterranean spaces, which Tate Modern said would create "exciting new spaces for art in the world".

The structure will mirror the height of the Turbine Hall's chimney

Two concrete galleries and a steel-lined gallery will provide 60% more space for works from the Tate Collection.

Tate Modern said the oil tanks, which have lain unused since the power station was decommissioned in 1981, will act as "innovative social and leaning spaces".

The second stage of the work will complete the building and will provide further floors of galleries.

But financing the extension is only half the battle, says BBC arts editor Will Gompertz. Once the building work is complete, money will have to be found to fund the day-to-day operations of the newly enlarged gallery.

Tate director Nicholas Serota said that would come from several sources.

"We will need public money, we will need private money, but we believe we have a very good case.

"The government will listen, as they have done before, but we are not complacent about that."

Plans for the project were initially approved in 2007 because the current gallery space was designed for two million visitors each year, but was attracting five million.