Brazil's government has authorised an emergency transfer of $US850 million to the cash-strapped Rio de Janeiro to help pay for infrastructure projects and security at the Olympics.
The city's financial crisis has threatened to disrupt public services during the Games when 500,000 foreign visitors are expected.
Rio de Janeiro acting governor Francisco Dornelles declared a state of financial emergency on Friday as a drop in revenues caused by a crippling recession and slumping oil prices left state coffers depleted.
The federal government was already considering an emergency loan to Rio after it missed interest payments with multilateral banks in May.
The missed payments complicated the release of a $US290m loan from the state development bank BNDES to finish a subway line in the city of Rio de Janeiro.
The authorisation, published in the government's official gazette, confirmed a Reuters report on Saturday.
The funds will be transferred to Rio once a supplementary credit is added to the budget, the gazette said.
The Games kick off on 5 August.