History buffs bidding to set up a village museum fear the 2012 Olympics will end their hopes of Lottery cash.

Rustington Heritage Association wants to establish the museum in an 1800 thatched flint cottage with a large garden.

The listed building, called Church Farm Cottage, in The Street, Rustington, near Littlehampton, has already been bought for £200,000 by Rustington Parish Council but about £400,000 is still needed.

Harry Clark, chairman of the association, fears money from the Heritage Lottery Fund is now being earmarked for the London Olympics, at the expense of smaller projects.

He said: "Initially, we were going for the whole amount from the Lottery but we don't think we shall get more than £50,000. It is our fear the Olympics is going to take money away."

Mr Clark said a temporary museum had been based in two rooms at the Woodlands Centre, Woodlands Avenue, since 1989.

But the parish council, which was based in the centre, wanted to reclaim the rooms.

Mr Clark said: "We have got about 2,500 artifacts going back to the Bronze Age, plus lots of photographs and postcards.

"A lot of things we have in store, nobody has ever seen."

The £400,000 would pay for conversion of the cottage and construction of two buildings in the back garden to house a cafe and craft workshops.

Mr Clark, who hoped the museum could be up and running in 2009, said: "It would be a wonderful asset for the village."

An open day is being held at Church Farm Cottage on March 31, from 10am to 3pm.