A review commissioned by the Tokyo Government has predicted that total costs for the 2020 Olympic and Paralympic Games could exceed 3 trillion yen (£22 billion/$30 billion/€26 billion) unless drastic changes are made.
The Metropolitan Government's investigative taskforce, commissioned by the capital city's new Governor, Yuriko Koike, blamed rising costs on poor leadership, governance and cost control measures.
Venues for at least three sports should be changed, it has been proposed, in order to help bring the budget down.
This could involve scrapping plans for a new swimming venue in favour of the existing Tokyo International Swimming Center, while rowing and canoe sprint could be moved 400 kilometres out of the host city to Tome in Miyagi Prefecture.
The Pacifico Yokohama could also be used as a new volleyball venue.
This comes as a major set back to Tokyo organisers as well as the International Olympic Commitee (IOC) after previous cuts were said to have saved $1 billion (£658 million/€919 million).
The latest figures are more than four times initial budget estimations.
Costs incurred constructing and maintaining both new and temporary stadiums are thought to have also contributed significantly along with transportation and security increases.
It was also claimed that the existing rowing and canoe sprint venue at the Sea Forest International Regatta Course on Tokyo Bay has risen to seven times its initial budget.
insidethegames understands that the sports world was taken by surprise by news of the proposal to switch venues, which was reported yesterday before being confirmed today.
They appear likely to oppose any switches.
Venue changes would require the approval of both the International Olympic Committee (IOC) and relevent International Federations.
"These sites were chosen over years and approved by the sports federations and IOC," said Tokyo 2020 President Yoshirō Mori.
"It would be extremely difficult to overturn this."
Final approval had been given to all the proposed venues.
The Task Force proposals were only advisory, however, and Games organisers are not expected to comment officially until Koike makes her suggestions.
The International Rowing Federation (FISA) claim they still consider the Sea Forest venue unchanged.
“FISA has read in the media that the Tokyo Metropolitan Government has formed a working group to review certain elements of Games planning," they told insidethegames.
"FISA has not been contacted by the Tokyo Government and has no information about this review.
"The Sea Forest rowing and canoeing venue has been approved by both sports, the IOC, the Tokyo 2020 Organising Committee and the Tokyo Metropolitan Government, detailed design plans have been approved by both sports and, we understand, detailed engineering work has commenced.
"FISA is of the understanding that the Sea Forest venue, proposed in the bid and reconfirmed in 2014, will be the host of the 2020 Olympic and Paralympic rowing and sprint canoeing regattas.”
Only three venues - for shooting, modern pentathlon and one for football - were initially due to be held outside an eight kilometres radius in a bid that was billed as compact.
But venues for basketball, taekwondo and cycling have since been moved outside.
Track cycling is now due to take place 145km southwest in Izu.