POLICE have smashed a forgery gang who planned to flood London with thousands of fake £2 coins during the Olympics

Officers raided a makeshift factory where it is alleged crooks were churning out up to 1,000 counterfeit coins a day.

Cops suspect the forgers were planning to circulate the fakes during the Olympics - when the capital will welcome millions of extra visitors.

City of London Police found a smelting machine, ingots of metal and moulds for £2 and £1 coins in a rented room in an office block. Just 300 yards away, officers also raided a scrapyard hidden behind a wall of tyres where the coins were coloured with gold spray paint.

A total of £2,000 in finished fakes was seized in Canning Town, East London. Three suspects were arrested.

Det Chief Insp Dave Evans, who led the operation, said: "With the set-up they had they could keep producing at a very steady rate - it's just a matter of putting in the hours.

"Time literally was money in this case. The coins look like the real thing at a glance and they will have got the weight more or less spot-on through trial and error.

"It really is a cottage industry. The electricity voltage needed to run the machines is no more than to boil a kettle. It won't have made much noise and could have been done around the clock."

It took just minutes at a time to make 12 coins which were then sprayed gold. Commander Ian Dyson, of City of London Police, said: "We know criminals have targeted £1 coins. What we've not seen so much of is criminals trying to make £2 coins - probably because they're more difficult to produce.

Experts say fake £1 coins can seem more shiny and the lettering on the edge may be uneven.

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