The specialist team will monitor suspicious betting patterns and share intelligence on those who attempt to bribe athletes into fixing events.
The new intelligence unit will target syndicates who may try to spot fix events or outcomes within matches. It will comprise the International Olympic Committee, Gambling Commission and if required, the police.
Explaining how the unit would operate, UK's Olympic Minister Hugh Robertson said: 'We have a very sophisticated information sharing system, so the moment there is any spike in betting activities that is recorded and investigated.
'We're reasonably clear that we can police the UK end of it. The much more difficult element is how you police illegal syndicates probably operating a long way away from these shores,' he told the BBC.
He said fixing had overtaken doping as the biggest threat to the July 27 to August 12 London Olympic Games.
Robertson believes the minutiae of competition is where betting scams are most likely to occur, given the growth in spread betting.
Gamblers can now stake money on the smallest detail in an event rather than the overall outcome, making illegal acts of fixing potentially difficult to detect, the Daily Mail quoted him as saying.
UK's Olympic Minister Robertson said, It absolutely is a possibility. The real danger lies in spot-fixing.
'Just consider how easy it is to bet on something like the first short corner in a hockey game - any team sport you can bet on an individual action or occurrence.'
'So you look at the number of team sports that there are in the Olympics and the threat - the real threat - becomes very obvious,' he said.
Robertson claimed that Western betting authorities were well equipped to identify illegal activities, but criticised regulation in the Far East and the Indian sub-continent.
'In November, three Pakistani cricketers were jailed for spot fixing during a 2010 Test match against England. Spot betting involves gamblers staking money on the minutiae of sporting encounters, such as the exact timing of the first throw-in during a football match.
When asked how big a problem Games fixing is, Robertson told Sky News: 'We don't really know but the threat is obvious and is enormous. If you listen to the president of the IOC, Jacques Rogge, he will tell you that this is the single biggest threat facing global sport."
'He's set up a high-level group to tackle it, to look at what causes it, to look at what we might do to educate athletes better and to look at what punishments are necessary to deter athletes from undertaking it.
'I'm part of that group, as are many other sports ministers and representatives from the gambling industry and the international sports federations.
'But be under no illusion, this is a very real threat, we've seen it in this country with the Pakistan Test cricketers and the scandal at Lord's, and it will be a very real part of the Olympics.' Robertson said.
Meanwhile, the department for Culture Media and Sport said the new unit would be operational throughout the 2012 Games.
'It will be able to obtain and draw on information and intelligence from various sources including the Betting Commission, national Olympic commissions and Interpol on any suspicious betting patterns or intelligence surrounding match fixing,' a department spokesman said.
He said the department had also consulted on making changes to the Gambling Act 2005 to ensure the Gambling Commission could share intelligence from police and other agencies.
People will be able to report any suspicious activity via an email hotline, he added.