Minister for Sport and the Olympics Hugh Robertson said: "London’s opening and closing ceremonies are a once-in-a-generation opportunity to showcase the very best of our country to four billion people around the world and have a potential advertising value of £2-5 billion.
"To get the ceremonies absolutely right, and boost the Games business and tourism legacy, we are putting additional investment into our ceremonies."
The additional £41m for the opening and closing ceremonies will be funded from the £9.3bn public finding package for the 2012 Games.
The venue security allocation has also risen by £271m to £553m after the number of security guards was revised from the 10,000 originally forecast to nearly 24,000.
Despite the additional costs, Robertson said that the Olympic programme remains on time and within budget, with more than £500m of unallocated contingency still available.