London 2012 organisers have confirmed that Dow Chemical, which has a contentious deal to sponsor the fabric wrap that will surround the Olympic Stadium, will not have any branding on it either before or during the Games.

Campaigners, who claim the chemical giant still has ongoing liabilities relating to the 1984 Bhopal disaster that killed an estimated 15,000 people, welcomed the move but said it was "inadequate" and again called for the deal to be scrapped altogether.

The company would not have been allowed to have its logo on the 1km fabric wrap at Games time due to the International Olympic Committee's "clean stadia" policy.

There had been a discussion about whether Dow would have its branding on five "test" panels on the outside of the stadium in the months preceding the opening ceremony but this has now been ruled out too in the face of vociferous protest.

A Bhopal Medical Appeal spokesman said: "This is the first real chink we have seen in Dow Chemical's armour. It's a clear admission that they have started to understand the harm that a company with their appalling track record, including the unresolved situation in Bhopal, will do to the image of the 'sustainable' London Games."

Barry Gardiner, the MP leading a campaign to urge Locog to scrap the deal, said: "This decision at last indicates Dow is showing some shame and that can only be positive. But we also hope any attempts by it to have a long-term involvement in the Queen Elizabeth Olympic Park are abandoned."

Locog has consistently defended Dow's sponsorship of the £7m wrap, accepting the company's explanation that all its outstanding liabilities relating to its purchase of the plant's owner, Union Carbide, in 2001 had been settled in Indian courts.

Scot Wheeler, spokesman for Dow Chemical, said: "Dow is proud to be a TOP Sponsor of the Worldwide Olympic Movement and we are committed to our partners and a successful London 2012 Games. We will continue to provide our sustainable solutions, including the Olympic Stadium wrap.

"To clarify any misrepresentation of the facts behind the stadium wrap for the London 2012 Olympics, company logo branding is not and never has been permitted on the stadium for any Olympic Games, per Olympic "clean venue" guidelines.

"The agreement between Dow and Locog was limited to branding of five test panels that were to be removed in the months before the Games and were not part of the final design. However in mid-summer, Locog and Dow agreed that Dow would defer the rights to these five panels to allow free and full execution of the design as determined by Locog."

The Indian Olympic Association has rejected talk of a boycott but has written to Locog to urge it to scrap the sponsorship. VK Malhotra, the acting head of the Indian Olympic Association, said last week: "It is unethical and unacceptable under the Olympic Charter that such a tainted company is associated with the Olympic Games."

London 2012 chairman Lord Coe has defended the deal. "Dow have been a global partner of the IOC [International Olympic Committee] since 2010, they came through a rigorous procurement process, one that was geared to creating the most sustainable solution to the wrap around the stadium," said Coe earlier this month.

"Dow were not the owners, the operators or involved in the management of that plant at the time of either the disaster or the settlement in 1989 that has been upheld twice by the Indian supreme court. There are issues around this issue but I am satisfied they are not issues that directly involve Dow."

(By Owen Gibson, The Guardian, 19/12/2011)