The head of the Commonwealth Games Federation said Monday the organisation was "actively exploring alternative options" to Durban as host of the 2022 Games after "key obligations" had not been met by the city.
Last month, sports minister Fikile Mbalula indicated the government might withdraw its financial support because of the cost of staging the multi-sport event, saying "we cannot live beyond our means".
CGF president Louise Martin, following a meeting of the organisation's executive board in London, said in a statement: "In line with the mandate from members at the 2016 General Assembly, the CGF is actively exploring alternative options, including a potential replacement host."
"The CGF will continue to have an open dialogue with the South African Sports Confederation and Olympic Committee (SASCOC) and the Republic of South Africa and remains committed to realising the shared ambitions of a future Commonwealth Games in Africa.
"The CGF is fully confident and committed to delivering a successful Commonwealth Games for athletes and fans in 2022."
The CGF said they had completed their review of the "final information" submitted by South Africa on November 30 to determine whether their proposals for hosting the 2022 Commonwealth Games were consistent with their original bid commitments and ensuing contract.
"It is with disappointment that the detailed review has concluded that there is a significant departure from the undertakings provided in Durban’s bid and as a result a number of key obligations and commitments in areas such as governance, venues, funding and risk management/assurance have not been met under the revised proposition," the statement added.
Durban was named as the 2022 Games host in September 2015 but Mbalula told a Cape Town news conference in February that the South African government and the organising CGF had still to reach agreement over costs.
"It does not look like we will find each other," said Mbalula. "We have given it our best shot, but we cannot live beyond our means."
The Games had been earmarked to start on July 18, the birthday of Nelson Mandela.
According to authorities, a budget of 6.4 billion rand ($492 million, 465 million euros) has already been set aside for the Games, in a country battling high unemployment and poor growth.
'Millions of rands wasted'
After British media reported Monday the Games would no longer take place in Durban, before the CGF issued its own statement, there was an angry response from South Africa's main opposition party which slammed the "millions of rand" already "wasted" on the bid by the country's governing African National Congress (ANC).
Zwakele Mncwango, the provincial leader of the Democratic Alliance (DA) party in the Kwa-Zulu Natal region that encompasses Durban, said in a statement: "This is a devastating blow to our city, and our people, who can only stand by and watch as millions of rands that could have improved our communities, delivered houses, improved services and created jobs have been wasted by the ANC government."
Mncwango, who cited reports that 118 million rand had already been spent on the 2022 Commonwealth Games, added: "We could not afford the Commonwealth Games from the start, but now good money has been thrown after a bad idea.
"The DA has consistently warned of and stood against the waste of millions on this bid, but the ANC government proceeded to bite off more than they could chew."
Both the 1995 rugby World Cup and the 2010 football World Cup in South Africa are seen as milestones in the country's efforts to promote national unity since the apartheid era.
The Commonwealth Games in Durban, on the east coast, would have been the first to be held in Africa.
Last month, the mayor of Liverpool said the northwest English city would be prepared to host the 2022 Games if they were no longer in Durban.