Programming director Judith Whelan said the $1 million price tag included the costs of sending commentators to Japan and setting up the broadcasting system.

Ms Whelan said the public broadcaster's budget was "running hot" because of the amount of emergency broadcasting it was committed to that had extended from a six month period to 12 months across the nation.

"Our budget is very tight. It has been tightened tremendously over the past five years and we are facing more budgetary pressure at the moment," she said on Tuesday.

Ms Whelan said Australians would still be able to pick up Olympics coverage on other digital platforms, with the ABC still providing daily updates.

The Australian Olympic Committee has called the decision "short-sighted" and a "great let down to Australians".

Chief executive Matt Carroll called on the ABC to reconsider, saying the decision was contrary to its charter.

"The Olympics can inspire Australians to embrace something valuable and as the ABC's charter indicates, 'to contribute to a sense of national identity'," he said.

Communications Minister Paul Fletcher said the decision would "surprise and disappoint many Australians".

"Under its legislation, editorial and content decisions are a matter for the ABC's board and management, and it is for the ABC to explain why it has taken this decision," Mr Fletcher said.

Australian Associated Press