The report, currently in draft form, is understood to argue that the benefits of bidding for the games would outweigh the costs if the impact of regeneration is considered.
Arup was appointed in January by a government-led consortium to consider the feasibility of a bid.
The London Development Agency and the British Olympic Association have seen a draft of the report. The completed version is expected to be submitted to the government next month.
The Treasury will then decide whether the costs of land assembly and infrastructure are worthwhile, given the risk of losing out to a rival city.
The report is understood to estimate that the cost of building a stadium in east London's Stratford – London mayor Ken Livingstone's desired location – would be between £200m and £300m.
What the stadium would be used for after the games is not clear. A source who has seen the report said: "The legacy of the stadium is the most difficult scenario to establish."
The Olympic Village, also earmarked for Stratford, could be transferred to a housing association or be used by the NHS once the games were completed. Either option would be a boost to the regeneration of the area.
The source said: "It is important to address not only the needs for the area in 2012, but also for 20 years after that – the likely economic life of the buildings."
The Excel Centre in London Docklands has been identified as a likely venue for some indoor sports, including boxing.
Building revealed last month that the the Millennium Dome in Greenwich, south-east London, has been earmarked for gymnastics, provided a proposed redevelopment into a 20,000-seat arena gets the go-ahead.
The government is expected to conclude a deal on the dome with the Meridian Delta consortium later this month.
A velodrome would be constructed in the Lea Valley and the proposed Wembley National Stadium would host the football final. Several locations have been identified as possibilities for the sailing events, including the Solent and Poole harbour in Dorset.
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