The Tokyo Olympics will be held largely without spectators after the Japanese government declared a Covid-19 state of emergency in the capital to run throughout the Games.

Yoshihide Suga, prime minister, announced the state of emergency at a press conference on Thursday evening as the Delta variant continued to drive a rapid increase in coronavirus infections in the country.

Seiko Hashimoto, Tokyo 2020 president, said: “No spectators will be allowed into any venues in Tokyo during the Olympic Games. I am very sorry to ticket holders who will be disappointed but this was the only choice available to us to control the spread [of coronavirus].”

Proceeding with no fans in the capital’s stadiums is likely to mean that the organisers need a taxpayer bailout to refund ticket holders.

The renewed emergency declaration means that the Tokyo public will be urged to stay at home even as the International Olympic Committee holds the world’s biggest sporting event in their streets and stadiums. The Olympics run from July 23 to August 8.

The IOC has insisted that the Games must go ahead during a state of emergency. Under the new rules, no fans will be allowed in Tokyo and the neighbouring prefectures of Kanagawa, Chiba and Saitama. Some spectators will be permitted at events such as football and baseball which are taking place elsewhere in the country.

Suga said: “The number [of people infected with Covid] who are seriously ill and the utilisation of hospital beds are still low, but taking into account the effect of variants, we must act to prevent another ripple of infections across the country.”

Yasutoshi Nishimura, the minister in charge of Japan’s Covid-19 response, described the situation as a “race between vaccination and the spread of the Delta variant”. He said vaccinations would continue as fast as possible during the state of emergency.

After a slow start, Japan’s vaccine rollout has gathered pace. However, it has given a first dose to just 27 per cent of the public, leaving a large pool of unvaccinated people among whom Covid-19 can spread.

On Wednesday Tokyo reported 920 new cases of coronavirus, the highest daily figure since May 13. The number of cases has been creeping up since Japan lifted a state of emergency last month.

The new state of emergency will be the fourth in Tokyo, after previous declarations in spring 2020, winter 2021 and spring 2021. Under previous restrictions, the public were asked to work from home when possible and restaurants were requested to close at 8pm.

Japan has a constitutional right to free movement, so all the restrictions are voluntary. Previous states of emergency have been effective in reducing Covid-19 cases, but medical officials were concerned about declining compliance with the rules and the Delta variant’s high transmissibility.

“The Delta variant is moving fast, responsible for 7 per cent of cases nationwide and 14 per cent in Tokyo,” said Norihisa Tamura, health minister. “With the idea that we’d like this to be the last round of emergency measures, we’ll continue vaccinations and tackle coronavirus with the wishes of the public in mind.”

Okinawa will also remain under a state of emergency, but Japan’s other large cities will not be covered by the restrictions, which should reduce the economic impact of the new measures.

“The economic recovery led by exports and manufacturing is unlikely to be derailed,” said Takeshi Yamaguchi, chief Japan economist at Morgan Stanley in Tokyo, noting the smaller geographic scope of the new state of emergency. He added that households have adapted to online shopping.

The pressure for another round of fiscal stimulus, however, would increase, Yamaguchi argued. This could include more cash handouts to lower-income individuals.