Culture Secretary Jeremy Hunt has called for a quick end to the row over funding for the 2012 Olympics.
The British Olympic Association (BOA) wants a bigger cut from the organising committee, Locog, of any surplus.
It is taking the dispute to the Court of Arbitration for Sport (Cas).
"This is not the right argument to be having so close to the Olympics in our country," Hunt told BBC Radio 5 Live's Sportsweek.
"I think it is an extraordinary thing that just over a year before the Games that we are going into this sort of dispute, which frankly is not going to benefit anyone.
"We need to sort it out quickly, it is just very disappointing and I do not think anyone would say it is the right way to be focusing our energies."
The dispute centres on whether the BOA is entitled to a share of the surplus from the Olympics alone, or the Games and Paralympics combined.
It is a crucial distinction because the Paralympics, which also take place in London next year, will need to be subsidised, whereas the Olympics could make a profit.
The International Olympic Committee (IOC) has already ruled that the two Games are tied together.
And Locog said in a statement earlier in March that it believes both events must be treated as one financially.
"The vision for London 2012, created by the BOA, Government and the Mayor of London and set out in the bid book is for one festival of sport, with an integrated Olympic and Paralympic Games, underpinned by a single budget," said the Locog statement.
The BOA will support about 550 athletes and 450 support staff in London, providing training advice, medical assistance and a holding camp.
"The BOA is fantastically important to the success of 2012," added Hunt. "It is a massive logistical operation and everyone in that organisation needs to be focused on that challenge."
The cost to the BOA of funding the GB team is expected to be in the region of £5m, but there is believed to be a shortfall of several million.
If Cas rules in favour of the BOA then either Locog will need to generate further funding or the money will need to be shifted from a wider sport budget.
"I can't really see how anyone's going to be a winner from this because there is no more money," Hunt stated.
"Sport got a very good settlement in the comprehensive spending review.
"No one's going to be able to go back to the Treasury and ask for more money so even if the BOA win, the money's going to have to come out of another part of the sports budget or the Olympics budget."
BOA chairman Lord Moynihan and chief executive Andy Hunt were last week suspended from the board of Locog.
The action was taken because of a conflict of interest and neither Lord Moynihan nor Hunt attended a meeting of the board on Thursday.
The BOA has been invited to nominate replacements until the case is resolved.