Security firm G4S has said it will incur a loss of £70m following its botched London 2012 Olympics contract, after finally agreeing a compensation deal with Games organisers.

The world's biggest security firm previously estimated it would lose £50m due to the Olympic fiasco, in which it admitted just weeks before the opening ceremony that it would not be able to provide the 10,400 guards required for the Games.

Thousands of police and military personnel had to be drafted in at the last minute, a move which severely tarnished G4S's reputation.

CEO Nick Buckles was subsequently forced to appear front of MPs to explain why his firm failed to train and provide enough Olympics guards. Although Buckles kept his job, two senior executives were forced to resign following an initial internal report into the fiasco.

On top of the £50m loss forecast in that initial report, the group has incurred additional costs of approximately £11 million, pertaining to charitable donations and external fees, and a further £7 million relating to the cost of sponsorship and marketing.

Buckles said he was "pleased" to have reached an agreement with the London Organising Committee of the Olympic and Paralympic Games (Locog) over the contract.

He added: "The Olympic and Paralympic Games were a great success for the UK and we would like to reiterate our thanks to the military and the police for their support. We would also like to thank the 16,000 men and women of G4S who played their part in securing the Games despite the challenges faced by the group.

"Whilst we are extremely disappointed to find ourselves in this position, we are pleased to have concluded these negotiations with Locog.

"We have accepted responsibility for the security workforce issues and, as a result of the settlement terms which we have announced today, have ensured that the overall cost to the taxpayer has been reduced significantly against the planned cost.

Neil Wood, Locog's chief financial officer said: "We are pleased to have reached an agreement that protects taxpayer's interests by reducing the payment due to G4S by £85m.

"The savings arising from this settlement brings the total savings to the public purse from the LOCOG venue security budget to £102m compared to the position in December 2011.

"The Home Office has been consulted on the settlement and fully supports the position reached between LOCOG and G4S."