Glasgow has been tipped as the favourite to host the 2014 Commonwealth Games after a rival city withdrew its bid amid budget fears.
Glasgow will find out if its bid is successful in November
Halifax pulled out after the Canadian city and the province of Nova Scotia withdrew their support due to concerns over a projected $1.7bn budget.
The move leaves Glasgow and Abuja in Nigeria in the race. The winner will be announced in November.
Politicians and business leaders said Glasgow was now the firm favourite.
Steven Purcell, leader of Glasgow City Council, said: "We have always been confident that we have a very strong bid. Glasgow has a great track record in hosting high profile sporting events and is an internationally renowned city.
"One of the strengths of our bid is that the vast majority of infrastructure and facilities we need are already committed or in place. That's why we know we will stick to our budget.
"All our efforts to show the Commonwealth what a wonderful bid we have will continue. We will win Gold for Glasgow in 2014."
The Commonwealth Games Federation (CGF) confirmed on Thursday that Halifax had withdrawn from the bidding process.
A review of the operating and capital costs revealed that the Canadian bid's budget had reached nearly $1.7bn - almost $1bn more than originally expected.
Consultants analysed the potential legacy of a successful bid, as well as value for money, projected revenue and economic impact.
Their report found "a number of significant risks" in hosting the event, including a higher than anticipated need for public funding and insufficient contingency funding.
A joint statement from the province of Nova Scotia and the Halifax Regional Municipality said this could "leave the provincial government vulnerable in the event of cost over-runs".
In a statement, Barry Barnet, minister of health promotion and protection, said: "We have said from the beginning that we would only support a bid that does not compromise the province's fiscal position, is the right size for Nova Scotia and leaves a lasting legacy for residents.
"I am personally extremely disappointed with this outcome but the results of the independent assessments and our own due diligence process are clear.
"The risks associated with pursuing the Games are simply too high."
However, the bid organisers have reacted angrily to the decision.
Dr Andrew Pipe, president of the Commonwealth Games Canada Group, called the decision "short-sighted".
"What has happened in the past 48 hours is absolutely baffling," he said.
"Those games were eminently winnable, the response we've had around the world attests to that."
Fred McGillvary, president of the Halifax bid committee, called it a "dark day" for the province.
He said the committee had been prepared to bring the cost down to $1bn.
However, the move was welcomed in Scotland. Stewart Maxwell, SNP sport, culture and media spokesman, said: "We believe that Glasgow would have beaten both the other cities who were bidding.
"However, it's now a two-horse race and Glasgow is the firm favourite. The SNP will be backing Scotland's bid all the way as the games are a huge opportunity which will be good for Glasgow and good for Scotland."
Glasgow Chamber of Commerce chief executive Dr Lesley Sawers said the news took Glasgow one step closer to securing the Games.
She added: "We must not be complacent and must continue to focus on convincing the committee members who will come to the city over the summer that we should be chosen.
"The Games can make a difference to the lives of everyone in the city and throughout Scotland, and the business community will continue to help spread the bid message."
The mayor of Halifax, Peter Kelly, said: "Our commitment has always been to the taxpayers of this municipality.
"We were hopeful we would be in a position to support the games but, given the concerns raised through the consultants' reports, we cannot support going forward.
"We will not jeopardise our fiscal position."
Michael Cooper, chief executive officer of the CGF, said Dr Andrew Pipe, president of Commonwealth Games Canada, had called him to withdraw from the race. He said: "He said he was astonished at the decision. It's deeply disappointing for the people of Canada.
"That leaves Glasgow and Abuja in the running and we wish the very best to those countries and cities."