Low-income people who live near London's Olympic Stadium may have to move to other parts of the country due to rising rents, the borough's mayor said Tuesday.

Newham Mayor Robin Wales said a new U.K. government policy limiting rental subsidies means that many people can no longer afford to live in the east London borough that now includes the sprawling Olympic Park.

Newham has long been one of the country's poorest boroughs, but the newly built Olympic Stadium, a large new shopping mall and public parks have regenerated parts of the borough and caused rents to rise.

Wales said he had written to over a thousand housing associations in other parts of Britain to ask if they can take in some of the 32,000 low-income families who need somewhere to live.

"The government has capped the levels of benefits so people are leaving, or being driven out of west and central London, where rents are higher, and they are moving to places like Newham," said Wales. "We have hundreds of people wanting to find rental accommodation and we can't house them."

In Britain, people with low incomes can apply to have all or part of their housing costs subsidized by local authorities, but the Prime Minister David Cameron's Conservative-led government last year introduced a controversial benefit cap that limits rent subsidies.

The maximum is now around 400 pounds ($646) a week for a four-bedroom house. Most people are only eligible for much smaller properties with lower benefit caps.

Wales said Newham residents will ultimately benefit from the Olympics because the Athletes Village will be turned into permanent housing, but he needed to find a more immediate solution because the government's housing policy has failed.

"People are being driven out of their homes, their kids are being ripped out of schools, because they can no longer afford their rents," he told The Associated Press. "These are people's lives we are dealing with."

Officials said the Newham council was exaggerating the situation.

"There is absolutely no reason for people to be moved far away from their communities — apart from the very expensive areas in central London, around a third of private rented properties are still affordable to benefit claimants," The Department of Work and Pensions said in a statement.

Anastasia de Waal of the social policy think tank Civitas said the Newham housing crunch shows that local residents in London's Olympic boroughs are not getting the economic boost that had been anticipated.

"Although the Olympics has obviously created job opportunities and regenerated the area, the jobs aren't often going to people who live in the area," she said.