Japan's ditching of a showpiece stadium will trim its Olympic budget by more than $2 billion when combined with other savings, International Olympic Committee chief Thomas Bach said Wednesday.

The IOC will monitor the development of a new stadium from the very start to make sure it remains "state of the art" for spectators and athletes, Bach told a press conference after an IOC executive meeting at which Tokyo organisers explained the changed plans.

Prime Minister Shinzo Abe announced on July 17 that a proposed futuristic design for a stadium by Iraqi-British architect Zaha Hadid had been scrapped because of the $2 billion cost.

Construction costs in Japan have "gone through the roof", Bach said.

"It wasn't an easy decision of the Japanese government, but we respect and can understand that in such times you would not like to build the most expensive stadium in the world," the IOC chief told a press conference.

He said the Tokyo organisers had made $1.7 billion in savings to the Games' budget in the seven months since the IOC passed measures to cut the cost of staging the Olympics. "And with the stadium decision I am pretty sure we will go beyond the $2 billion mark," he added.

Japanese organisers estimate that they will now spend about $2.8 billion on new venues -- compared to $18 billion for the 2012 London Games.

Japan is quickly to launch a new tender for a cheaper stadium so work can start early next year to be ready for the 2020 Games.

The IOC chief said the Olympic authorities wanted to be associated even in the tender offer so that specific demands of the Games are taken into account.

"What we need is state of the art for athletes and spectators, and I am sure we will get it," Bach said.