G4S repeatedly assured ministers they would "overshoot their targets" for recruiting Olympics security staff, the Home Secretary has told MPs.
Theresa May said the under-fire firm, which has seen its shares dive by as much as 10 per cent following the security debacle, only admitted last Wednesday it would fall short of providing the promised 10,000-strong army of guards for the Games.
She added: "It was reported that ministers knew there would be a shortfall in security staff last year. This is untrue."
However, Shadow Home Secretary Yvette Cooper told the Commons Mrs May must have been the "only person who didn't know" the firm was going to fail despite repeated warnings.
Ms Cooper said Tory London Mayor Boris Johnson had even said the problems were known about "ages ago" and his deputy Stephen Greenhalgh had claimed security concerns had indeed been raised "repeatedly".
She added: "Even G4S say they have been discussing the detailed shortfall for eight or nine days, yet last Monday the Home Secretary told the House she was 'confident our partners will deliver'.
"It is incomprehensible that monitoring was that poor that no one told her until Wednesday."
With less than two weeks until the opening ceremony, ministers insisted the Games would be secure and dismissed the firm's failure as a "hitch".
An extra 3,500 troops and officers from nine of the country's forces have been parachuted in to plug the security gap left by G4S.