David Cameron has pledged to "go after" G4S over the Olympics security chaos as the Government targeted the firm's multimillion-pound management fee.
But the Prime Minister also appealed for people to remain positive about the Games, insisting the controversy and heavy rain would not stop the UK staging a "great" event.
The row over security continued to overshadow the build-up the day after G4S boss Nick Buckles made an humiliating appearance before MPs.
While the chief executive admitted that there would be financial consequences from the company's failure to recruit enough staff, he insisted it wanted to keep a £57 million management charge.
However, sports minister Hugh Robertson said the Government was activating "all penalty clauses" in the contract. "The penalty clauses apply to the whole contract, including the management fee," he told a press conference in Westminster.
Despite calls for Mr Buckles to fall on his sword, Mr Robertson said he should stay in his post for now to provide "stability" during the Olympics. "I don't want resignations causing chaos. What happens to Mr Buckles afterwards is a matter for others in the post-Games environment.
"What is crucial now is that he and his organisation concentrate absolutely on delivering a safe and secure Olympics. I have confidence in their ability to do so."
He insisted none of the contingency budget would have to be spent making up for the failures by G4S. Mr Robertson also said he still believed it had been right to use a private contractor for Games security alongside police and military resources.
His comments came amid reports that a request may be made for up to 2,000 additional troops to plug any further gaps in security if G4S's problems become more severe. The Ministry of Defence, which has already upped its contribution by 3,500 to 11,000, said that contingency plans were in place to increase the numbers again if necessary.
Speaking on a visit to Afghanistan, Mr Cameron said: "Let's be clear, if G4S don't fulfil their contract we will go after them for the money to make sure that they help pay for the military personnel that have been brought in."