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Durban is in line to bid for the 2020 Games, a project that would require at least $4.5 billion to build new venues.
Government approval is still needed before the South African Sport Confederation and Olympic Committee can submit a bid ahead of the IOC's Sept. 1 deadline.
Port Elizabeth and Johannesburg have also expressed interest, but South Africa Olympic committee president Gideon Sam said Durban was the likely candidate.
''The economies of scale will tip it in the direction of Durban but that final decision has to be taken,'' he told The Associated Press.
Rome is the only city so far that has been officially nominated by its national committee to bid for the 2020 Games. Tokyo, Madrid, Istanbul, Doha and Dubai are among other potential contenders.
Africa has never hosted the Olympics, with Cape Town finishing third behind winner Athens and Rome when South Africa bid for the 2004 Summer Games.
South Africa set its sights on a 2020 bid after successfully hosting the 2010 World Cup.
Durban, South Africa's third largest city, was one of the nine World Cup host cities and built the Moses Mabhida Stadium for the tournament. The oceanside facility has a capacity of 72,000, space for an athletics track and an adjoining indoor arena.
Durban, which is served by a new international airport, will have a chance to impress voters when it hosts the International Olympic Committee's general assembly in July.
After that meeting, the IOC will formally invite bids for the 2020 Olympics ahead of the Sept. 1 deadline.
The winner will be announced in 2013 at the IOC session in Buenos Aires, Argentina.
''If we don't win on the Olympics, there is 2022 for the Commonwealth Games,'' Sam said.
Though the taxpayer-funded stadiums built for the World Cup have been largely unused since the tournament, Sam said that should not deter an Olympic bid.
''As a South African we look at those white elephants and see that we have achieved something,'' Sam said in London at the SportAccord conference. ''It has given us the confidence to look forward and see what London has done with the Olympics and we wonder, ''Why can't we?'''
London has a $15 billion public sector budget for the 2012 Games, with most money spent on building venues and regenerating an area of east London into the Olympic Park.
Readily acknowledging that an Olympics in South Africa would leave unused or little-used stadiums, Sam urged the government to recognize that the benefits may only be reaped many years later.
''We are saying keep (the venues) there. In five years or 10 years time (after the Olympics) we will be on the road and it will be utilized,'' Sam said. ''Over the years of sports isolation, because of our policies of apartheid, we are catching up with the rest of the world now. The faster we run all the better for us.''
While Sam said building new venues for the Olympics would cost around $4.5 billion, he expects the financial hit to be outweighed by the employment generated by the building projects.
''The big issue now for South Africans is we must create jobs - can you imagine if we get the nod for the Olympics how many jobs will be created,'' Sam said. ''Somehow (the government) will find a way to find that kind of money.''
