ROME - Rome dropped its bid for the 2020 Olympics on Tuesday after Premier Mario Monti said the Italian government would not provide financial backing for the multi-billion-dollar project at a time of economic crisis.

Monti announced after a Cabinet meeting that it would be an irresponsible use of taxpayer money to fund the Olympics with a guarantee that the government would cover any deficit.

"We arrived at this unanimous conclusion that the government didn't feel it was responsible to assume such a guarantee in Italy's current condition," Monti said. "At this time we don't think it would be fitting to commit Italy to this type of guarantee which could put at risk taxpayers' money."

The costs for hosting the Olympics in Rome had been estimated at $12.5 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 from bid cities.

Rome's exit leaves five cities in the 2020 race: Madrid; Istanbul; Doha, Qatar; Tokyo; and Baku, Azerbaijan.

The IOC will study the bid files and decide in May whether to retain the five cities or pare the list. The 2020 host city will be selected at an IOC meeting in Buenos Aires in September 2013.

Italy's financial woes ended the country's hopes of landing its second summer Olympics following the 1960 Games in Rome.

"Monti has told us no. It's a great sadness," Gianni Petrucci, president of national Olympic body CONI, said. "It's a dream that has vanished after two years of hard work. ... Of course, doing it on the last day leaves me feeling really, really bad. There should have been more respect. But, as I said with great conviction to president Monti, we did everything we could."

Madrid and Baku submitted their bid files to the IOC on Tuesday, a day after Tokyo and Doha delivered their documents. Istanbul will do so on Wednesday.

With Rome out of the contest, British bookmaker William Hill installed Tokyo as the 6-4 favourite, followed by Madrid at 9-4, Istanbul 4-1, Doha 6-1 and Baku 8-1.

Madrid is bidding for a third consecutive time despite Spain's own severe financial downturn. In contrast with Italy, the Spanish government has backed the Olympic effort.

"It's a tough moment for Spain due to the economy, but in these moments of crisis there are two solutions: Hide or say 'Here I am presenting the bid because I think it is good for the city and for the country and because we can offer a games what will be among the greatest ever,'" bid leader Alejandro Blanco said Tuesday.

Monti heads an Italian government of technocrats charged with battling the country's economic ills. By scrapping Rome's bid, he gave an important message to the markets that Italy is serious in its pledge to cut its debt.

Italy will now have to wait for a potential candidacy for the 2024 Olympics, when bids from South Africa, the United States and France are also possible.

"There's so much sadness that we have lost a great chance," bid chairman and IOC vice-president Mario Pescante said. "The project was serious also from an economic point of view but it was a decision that was thought about a lot and we have to accept it."

Bid promoters had claimed the games could help revitalize Italy's economy in the long run.

"We spent hours talking but (Monti) was unshakable on the subject of the accounts linked to the general economic situation," Pescante said. "We have to resign ourselves to the fact that for at least 10 more years we won't talk anymore about having the games in Italy."

Sixty leading Italian athletes — including football star Francesco Totti, as well as Olympic canoer Antonio Rossi and Alpine skier Deborah Compagnoni — had signed an appeal urging Monti to back the bid.

However, former 200-meter world record holder Pietro Mennea, one of Italy's greatest athletes, applauded the government's decision.

"The Olympics won't go away. We can bid again in a few years," Mennea said. "With this decision, Monti wanted to give a hand to Italian sport, showing that there are more important things than Olympic values."

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AP Sports Writers Stephen Wilson in London and Paul Logothetis in Madrid contributed to this report.