Elite sport quango, UK Sport, will receive a 29 per cent increase in government funding to help Britain’s athletes at the 2016 Olympic Games in Rio and also in Tokyo in 2020.

The surprise announcement came today in the UK’s government spending review.

Chancellor George Osborne told Parliament: "I will help UK Sport – which has been living on diminishing returns – with a 29 per cent increase in its budget, so we can go for gold in Rio and Tokyo.”

The Exchequer provides a third of UK Sport's funding, with the rest coming from the National Lottery.

The amount will increase from £135m to £148m in the run up to the Tokyo Olympics in 2020.

The announcement is an achievement for UK Sport chair Rod Carr and his team, who were anticipating cuts and had expressed concern at the prospect.

Carr has been lobbying the government since his appointment in 2013, to stress the value of sporting medals.

In an interview with Sports Management he said: "People get a great deal of joy, comfort and general sense of wellbeing from seeing people with the Union flag on them doing well in the Olympics, as was proven in 2012. It massively boosts the nation’s morale."

He also set the organisation a tough challenge, saying: “We want to be the first nation in the history of the Olympic and Paralympic Games to improve its medal haul after hosting the Games.”

This means that Team GB is expected to bring back more than 65 medals from the 2016 Rio Olympics – and another 120 from the Paralympic Games.

Osbourne also announced the government will back the UK to bid for two major sports events in 2121 – the Cycling Road World Championships and the Rugby League World Cup, with Manchester as the bidding city for the latter.

The spending review document reads: "Following the success of hosting the London 2012 Olympics and the Rugby World Cup, the government will support the ambition to host the Cycling Road World Championships and the 2021 Rugby League World Cup in the Northern Powerhouse [Manchester]."

Fears that community and grassroots sport would be hit proved unfounded, as they were given a “flat cash settlement”, to maintain their current status. The UK’s anti doping agency will also have its funding maintained.

The main dark cloud for sport will be cuts to local authority budgets, which may mean some community sport is affected by a fall in spending on local sport and leisure facilities. This could open up opportunities for community groups and private contractors, but will also hit the most deprived areas.

The government announced an end to the exemption on income tax which currently applies to non-UK athletes who compete in events in Britain.

This change will come into effect after the London Anniversary games in 2016, although the World Athletics Championships in London in 2017 will still be exempt.