Sponsorship is set to contribute over half of the £2 billion budget needed to stage the Games along with broadcasting rights, ticket sales and merchandise.

Restrictions to advertising and trading will help prevent ambush marketing and unauthorised trading near Games venues; help protect sponsors' vast investment in the event and ensure a welcoming environment for spectators.

Hugh Robertson, Minister for Sport and the Olympics, said: "Sponsorship is part of modern international sport providing a vital source of funding.

"Like many other sporting events, the London Olympic and Paralympic Games could not go ahead without its sponsors, so it is important that we protect their investment as well as creating a welcoming and unobtrusive atmosphere for people arriving at venues."

The consultation sets out proposals on the management of advertising and trading in open spaces within a few hundred metres around the Olympic and Paralympic venues and road race routes.

The restrictions will only apply for when competition at the venues is taking place.

Billboard advertising, posters, flyers, giveaways, projected advertising, moving and aerial advertising will all be covered by the regulations although standard shop signage and in store advertising will be exempt.

Traders wishing to trade in a regulated area will need to apply to the Olympic Delivery Authority (ODA) to be considered for a free secondary licence.

"The measures we are proposing are in line with those used at all Olympics since Sydney 2000 and will apply to a small area around venues and only around the time events are taking place," Robertson added.

"They aim to strike the right balance between preventing unauthorised advertising and trading that damage the rights of the sponsors and enabling businesses to operate as usual."

It is a requirement of the International Olympic Committee (IOC) host city contract that measures are in place to prevent ambush marketing and unauthorised street trading during the Games, and the power to make advertising and trading regulations was introduced by the London Olympic Games and Paralympic Games Act 2006.

There is existing legislation regulating advertising and trading but the new regulations are tailored to the 2012 Games, adding a level of consistency to the existing controls and providing for infringements to be dealt with quickly.

Officers designated by the ODA will be responsible for enforcing the regulations and a light touch approach which is in line with the Better Regulation Executive policy on Enforcement.

The venues and routes affected by the legislation in London are: Earls Court, the ExCel centre, Greenwich Park, Horse Guards Parade, Hyde Park, Lord's Cricket Ground, North Greenwich Arena 1 - currently known as the O2 Arena - the Olympic and Paralympic marathon routes, Olympic Park, Olympic race walk route, Olympic and Paralympic road cycling routes, Olympic time trial route, Olympic triathlon run and cycle routes, Royal Artillery Barracks Woolwich, Wembley Arena, Wembley Stadium, and Wimbledon.

Outside London the venues affected are: Broxbourne, Coventry Stadium, Eton Dorney, Hadleigh Farm in Essex, Hampden Park, the Millennium Stadium, Old Trafford, St James's Park, Weymouth and Portland, the outer London sections of the Olympic and Paralympic road cycling routes and the Olympic time trial route.

The main areas the consultation seeks views on are whether the Government has been clear in explaining what they intend is "caught by the restrictions" and how they intend to deal with any breaches.

The consultation also seeks views on whether the proposals made for the areas affected by the regulations, and the duration they apply, are reasonable.

The Government will consult separately on the Olympic time trial and Paralympic road race once the routes for these events have been finalised.

Advertisers and traders were given notice in June 2009 of the general nature of the regulations and informed that there would be a consultation.

The Government are also keen to stress that the temporary restrictions will not impact on the rights of individuals to freely express their opinions by means of peaceful protest and that posters and flags displayed inside someone's home will not breach the regulations.

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