Italy’s prime minister has scrapped Rome’s bid for the 2020 Olympics, saying the government can’t supply the required financial backing at a time of financial crisis.

Prime Minister Mario Monti announced after a cabinet meeting on Tuesday that it would be an irresponsible use of taxpayer money to fund the Olympic project.

Costs for hosting the Olympics in Rome are estimated at about $A12 billion.

The decision came a day before the deadline for formal submission of bid files to the International Olympic Committee. The IOC requires government financial guarantees.

Rome was the first of six cities to submit a bid for the 2020 Games. The others are Baku, Azerbaijan; Doha, Qatar; Istanbul; Madrid; and Tokyo.

The IOC will select the host city in 2013.