London and Paris have earned praise for their "very high-quality" bids to stage the 2012 Olympic Games in a crucial inspection report published on Monday.
Paris, favourite of the five candidates to win, earned a glowing endorsement.
The International Olympic Committee evaluation commission believes London can deliver promises on venues, transport, the environment and legacy.
New York and Madrid earned positive remarks, but Moscow was criticised for a lack of detailed planning.
The report does not specifically rank or grade cities, but could influence the 117 IOC members when they vote on a host city at a special meeting in Singapore on 6 July.
Paris appears to have reinforced its status as front-runner, scoring highly for its accommodation, transport and budget plans.
Officials from all five candidate cities are studying full details of the 123-page report, but there appear to be no negative comments about the French bid.
It says that a public opinion poll commissioned by the IOC showed Paris had 85% support in its own capital and 79% throughout France.
In the November poll, 68% of people in London and 70% throughout the country supported its campaign.
French accommodation and transport plans for the Games were praised, and the commission said there were no signs of their officials being complacent.
The report states that a London Games would cost £2.36bn and "the budget is reasonable and achievable".
London found favour with the legacy which a successful Games would leave behind, particularly in the capital's east end, where much of the bid is centred.
And planned improvements to the city's transport network, which has been seen as a potential stumbling block, were given cautious approval.
"Provided that this proposed programme of public transport improvements is fully delivered on schedule before 2012...the commission believes that London would be capable of coping with Games-time traffic," said the report.
As for venues, the IOC did note that "careful planning would be required to ensure that all facilities are completed on time".
Some reservations were expressed about the New York, Madrid and Moscow bids.
New York, which had a public approval rating of only 59%, was criticised for a lack of progress with its Olympic Stadium plans.
Moscow had problems with its accommodation, security and planning, while Madrid needed more hotel rooms close to the Games.
However, the Spanish bid earned praise for its integrated transport and infrastructure, plus its pledge to hold the "greenest ever" Olympics.
Bookmakers reacted to the report by cutting London's odds, but Paris remain clear odds-on favourites to win the vote.
London bid leader Lord Coe said his team were satisfied at the commission's conclusions on factors previously questioned, including the location of venues, the ability to handle transport demands, and levels of public and government support.
"I think that we are in a position now to continue to build on the momentum that this bid has enjoyed," he said.
"We are in good shape to take the battle even harder and further towards our goal of bringing the Olympic Games to London in 2012."
Minister for Culture, Media and Sport Tessa Jowell added: "I'm enormously proud of the bid's progress - it's strong because we acted so quickly on the content of last year's report.
"We weren't complacent then and we won't be now. Our foot is firmly on the accelerator.
"This report shows we have a bid that can win."
IOC approval survey, November 2004
(Figures for city, then nationwide)
Madrid 91% (85)
Paris 85% (79)
Moscow 77% (76)
London 68% (70)
New York 59% (54)