Theresa May has told MPs angry over the Olympics "security shambles" that the government was only made aware of gaps in the number of guards provided by G4S on Wednesday.
The home secretary told the Commons that ministers had been receiving assurances from G4S over the last few days, but the "absolute gap in the numbers was only crystallised finally yesterday".
Defence Secretary Philip Hammond has confirmed that an extra 3,500 troops will be deployed to cover the Games, many of whom are supposed to be on leave after returning from Afghanistan.
Keith Vaz, the Labour chairman of the Commons Home Affairs Select Committee, told May: "G4S has let the country down and we have literally had to send in the troops."
Yvette Cooper accused Theresa May of "another Home Office shambles."
May told MPs that 10,000 Olympics and Paralympics tickets had been donated to armed services through Tickets for Troops.
Asked whether there were any financial penalties for G4S, Mrs May said the firm's contract was with organisers Locog, but she understood that it did include penalties.
She said "G4S have said that they are not able to provide that balance of 16-17,000 troops, therefore we have taken the step of bringing in the 3,500 military. That is exactly what you expect a government to do in these circumstances."
G4S admitted it was experiencing "some issues in relation to workforce supply and scheduling" and had accepted that the government was turning to the military for extra help.
"Staff taken on don't yet know the first thing about any of the procedures, and that poses a huge security risk. How can a risk management company not have any continuity plans in place for the Olympics?", a manager told Channel 4 News.
Defence Secretary Philip Hammond admitted the move, which means 17,000 troops will now be involved in the Olympics, will impose an extra burden upon individual service men and women and their families, "especially over the summer holiday season".
But bringing in extra military resources was "prudent" and would help ensure the safety of the Games, he said.
"This has been an accident waiting to happen. The Home Office has waited to make a decision on this because G4S has been saying it is all in hand. But we've run out of time."
Retired Colonel Richard Kemp, a former UK commander in Afghanistan, said the development would hit troops "very hard indeed".
"Many of the soldiers that are coming - this extra 3,500 - I understand are soldiers who have just returned from Afghanistan or about to deploy to Afghanistan, so they are people who I imagine are getting ready to go on leave with their families, a well-deserved leave perhaps after six months away on operations or training for future operations, and this will hit them very hard indeed," he told BBC Radio 4's Today programme.
Keith Vaz said he had asked G4S chief executive Nick Buckles and its chairman Alf Duch-Pedersen to appear before the committee to explain why they do not have sufficient staff to provide security at the Olympics.
"I have written to G4S to inform them that the committee expects to see them next week," Mr Vaz said.
"Considering the assurances we have been given in the past this is very serious and we expect a full explanation from a company that not only have the Olympic contract, but receive hundreds of millions of pounds from the Home Office and other Government departments each year."
BBC Radio 4 Today
Liz Kendall MP