TOKYO - Hiroshima formally ended its flirtation with hosting the 2020 Olympics on Monday when Mayor Kazumi Matsui told the Japanese Olympic Committee (JOC) the city could not afford to bid.

Matsui told JOC president Tsunekazu Takeda that Hiroshima had debts still outstanding from staging the 1994 Asian Games which it was struggling to pay off.

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"The city is still continuing to repay loans from the Hiroshima Asian Games in 1994 and we are still face financial difficulties," Matsui told reporters.

"In fact we were unable to find evidence of any proper bid timetable (under former Mayor Tadatoshi Akiba)."

Hiroshima initially proposed a joint "peace bid" with Nagasaki in a move by the only city to have suffered an atomic attack to promote nuclear disarmament.

Nagasaki abandoned its 2020 Olympic ambitions last January, however, citing financial difficulties.

Matsui decided to formally pull the plug on Hiroshima's already flagging bid after being elected in April.

"It's a shame that (Hiroshima) has pulled out but it's unavoidable," said Takeda. "We accept the decision."

Tokyo Governor Shintaro Ishihara reiterated his hopes Japan's capital can rebound from the disappointment of losing out in 2016 with a successful bid for 2020.

"It's better not to extinguish the torch," he said.

Tokyo were beaten by Rio de Janeiro in the race to stage the 2016 Olympics, but look favourites to become Japan's bid city once again if the JOC throws its hat into the ring.

Japan's plans for a 2020 bid had been thrown into chaos following the deadly earthquake and tsunami in March but the JOC said recently of efforts to table a bid.

Candidate cities must submit bids to the International Olympic Committee by Sept 1. The host city will be selected in September 2013.