The Yomiuri Shimbun newspaper reported that the Japanese Government is considering the measures, with a decision on spectator attendance to be taken next month.
Overseas fans have been banned from attending the Games amid the COVID-19 pandemic, but organisers have held off on a decision on domestic fans to date.
A decision is likely to be made towards the end of June, with state of emergency measures in 10 areas including Tokyo set to expire on June 20.
Japan is prioritising vaccinations for the elderly.
The country’s slow vaccine rollout has faced criticism, but the opening of vaccination centres in both Tokyo and Osaka has provided a boost.
Japan has reportedly administered 12.3 million doses of vaccines, compared to 11.2 million on Friday (May 28).
Over 3.2 million people have been fully vaccinated, roughly 2.6 per cent of the country’s overall population.
The Japanese Government is looking to fully vaccinate all residents aged 65 or older - about 36 million people - by the end of July.
Japanese athletes are set to receive vaccines from tomorrow ahead of the Tokyo 2020 Olympic and Paralympic Games.
Two polls have been published highlighting a contrasting public mood towards holding the Games.
The Yomiuri Shimbun published a poll prior to the Tokyo Metropolitan Assembly elections in July, which gave Governor Yuriko Koike a 57 per cent approval rating.
Respondents were marginally in favour of holding the Olympic and Paralympic Games.
The poll saw 25 per cent in favour of holding the Games with spectators, with 24 per cent against.
Overall, 49 per cent of Tokyo residents were supportive of hosting and 48 per cent in favour of cancellation.
The remainder were undecided.
Yomiuri Shimbun said the Tokyo poll contrasted with a national survey the newspaper published earlier in May, where 59 per cent called for cancellation compared to 39 per cent wanting the Games to be held.
A separate poll has been published by the Nikkei newspaper, which reportedly found 63 per cent in favour of cancellation compared to 33 per cent in favour of hosting, with or without spectators.