The London 2012 Olympic and Paralympic Games were delivered £377 million ($601 million) under budget.
Figures released by the Department for Culture, Media and Sport show the forecasted cost of the two quadrennial events at £8.921 billion ($14.236 billion), a reduction on the predicted figure of £9.298 billion.
Overall the government says savings of £1.032 billion have been made across all areas of the Games, including £47 million on the Olympic Delivery Authority's construction and transport programs.
"London 2012 was a tremendous success, and it is a significant achievement to deliver this large and complex program on time and under budget," said minister for sport Hugh Robertson.
"The work of the construction and delivery teams, from the ODA and LOCOG (London Organising Committee of the Olympic Games and Paralympic Games), has set a very high standard and I have no doubt that London 2012 has set a new benchmark for the management of Olympic and Paralympic Games in future."
With £480 million of the budget set out for the Games unspent, the government will now be under scrutiny as to whether the 2012 Games will deliver a lasting legacy.
The process of transforming London's Olympic Park in the east of the Britain's capital from a world-class sporting venue into a brand new area of the English capital has already begun in earnest with the handover of the site to the London Legacy Development Corporation (LLDC) from LOCOG.
The LLDC has already removed many of the temporary structures around the Park.
"The UK hosted a spectacular Olympic and Paralympic Games this summer," LOCOG chairman Sebastian Coe said in a statement. "We have now begun the first chapter of the lasting legacy we promised when we bid for the Games.
"We began our work straight after the Games to transform the venues, parklands and facilities in the Olympic Park to ensure generations to come will benefit from a golden summer.
"I congratulate my team for taking out all the temporary structures so quickly so that the job of transformation continues quickly."
The area, which will be known as the Queen Elizabeth Olympic Park, will now undergo a £292 million ($467 million) redevelopment, including the creation of 2,818 news houses and apartments in the former Olympic Village site.
"This will take some time, but the wait will be worth it," explained LLDC interim chief executive Dennis Hone.
"Queen Elizabeth Olympic Park will be a fantastic new place to live, work and visit and enjoy. This really is an opportunity to create a legacy of the type we have never seen before."
The LLDC has now taken control of the Aquatics Centre, the Velodrome and the Basketball Arena, with handball venue the Copper Box to come under its jurisdiction in November before the Olympic Stadium and press and broadcast centers are handed over in December. A decision on the Olympic Stadium's new tenants has yet to be reached.
A total of 250,000 temporary seats and 140 kilometers of fencing have already been removed from venues across London, including the beach volleyball arena at Horse Guard's Parade and the Equestrian Arena at Greenwich Park.
The process is scheduled to be completed by January 2014, with 8,000 jobs, five new neighborhoods, three new schools, nine new nurseries, three new health centers and a new library to be created at the Park.
The legacy of the Games will spread beyond construction projects within the Park.
London also hopes to host a one-day road cycling race, similar to the prestigious Paris-Roubaix event, which would be open to both professionals and amateurs.
Organizers hope the inaugural race can be staged in August 2013, cashing in on Britain's recent domination of cycling.
Bradley Wiggins became the nation's first Tour de France winner earlier this year, while Team GB collected a total of 12 medals, eight gold, in the Olympic Velodrome.