Jowell said it was "perfectly reasonable" for people to ask why £9.2 billion was being spent on hosting a sporting event but argued it was a regeneration project which was providing a "shot in the arm" for small - and medium-sized businesses.
Jowell caused controversy last November when she told industry bosses that Britain would not have bid for the Games if it had known an economic downturn was approaching.
But speaking on BBC1's Politics Show today, Jowell said: "If we hadn't won the Olympics we would have had to invent something equivalent to this level of investment.
"This is the modern application of the power of Government to invest in skills and to make sure that the economy generally recovers from the downturn in good shape to respond to the challenges of the future."
Jowell argued the money was being spent on a project to regenerate East London which would also see the Games brought to the city.
She said: "It's perfectly reasonable if people say, 'Why are we spending this money now?'
"My answer is it's a very good thing we are spending this money.
"The economy of the UK needs precisely this kind of programme which is a shot in the arm of our economy, providing orders for small- and medium-sized businesses that otherwise might be laying off staff, might be struggling, and also a project which is regenerating the east end of London.
"And remember, for all the focus on the Olympic costs, actually this is a regeneration project which is giving rise to the Olympics.
"Seventy five pence in every £1 that is being spent on the Olympic Park is on regeneration."
FRANK UIJLENBROEK WORLDSPORTPICS