McCann Erickson will be tasked with handling all 2012 advertising, promotion and digital marketing.
The agency beat WPP Group, which had been tipped by insiders, to the account. The deal will see McCann Erickson become an official sponsor to the Games and will pay around £10m in value-in-kind services to the Olympic organisers.
Despite the economic turndown several deals, including the search for an official hotel partner, are now close to being completed.
However, the search for a retail partner still remains in the balance.
LOCOG would like to secure an official Games retailer but is facing resistance from global Olympic partners Coca-Cola and McDonald's, according to sources.
LOCOG declined to comment