New York Olympic bid leaders are to discuss whether to pull their city out of the race to host the 2012 Games.

The move comes after a state government panel refused funding for the Olympic stadium near Madison Square Garden.

New York mayor Michael Bloomberg said he would “consult with the United States Olympic Committee” on the prospect of withdrawing the bid.

He had earlier admitted that rejection of the stadium would “seriously damage” New York's chances of victory.

Bloomberg said on Tuesday that New York had “let America down”.

“The [US Olympic Committee] selected us, New York, to represent the country. Other American cities wanted to have the privilege of competing at the world level,” he added.

USOC chairman Peter Ueberroth has insisted that the New York bid cannot survive without a stadium but the organisation has the final say on whether or not New York pulls out.

International Olympic Committee members would find it impossible to support a candidate who could not even guarantee the venue for the opening and closing ceremonies and the athletics events.

If New York does not go forward for the final vote against London, Paris, Moscow and Madrid in Singapore in July, it could damage US hopes of hosting future Games.