Japanese broadcaster NHK announced that the Olympic committee has made the decision to retire the design, and will be holding an emergency meeting to determine how to proceed.
The logo by Japanese graphic designer Kenjiro Sano has been dogged by accusations of plagiarism since it was unveiled on 24 July 2015.
Related story: Tokyo unveils 2020 Olympics logo by Kenjiro Sano
— Olivier Debie (@OliDebie) July 28, 2015
Both logos feature prominent graphic circles, as well as a central stem and top and bottom serifs borrowed from T and L letterforms.
The games' organisers announced that Sano's design was based on the T in Tokyo, tomorrow and team, while Debie's combines the letters T and L from Théâtre and Liège.
Despite his logo not being a registered trademark, Debie last month threatened the International Olympic Committee and Tokyo games organisers with legal action if the logo wasn't withdrawn.
Tokyo 2020 marketing director Hidetoshi Maki originally stated: "Their logo was not a registered trademark, so there is absolutely no problem."
Sano himself was adamant that Debie's claims were "groundless", and refuted all accusations of plagiarism.
"I take a lot of time with every design, nurturing them like children," the designer claimed. "So for this kind of talk to emerge is really unfortunate and kind of sad."
"I was shocked and found it hard to accept, to be honest," he added. "But I've never been to Belgium, nor seen the logo even once."
The games organisers also emphasised that both of the emblems had been put through a stringent verification procedure.
"Prior to the announcement of the emblem, the IOC and Tokyo 2020 conducted extensive research on trademark protections internationally," they said in a statement. "We did not identify any particular issues through the thorough process and then became confident about releasing the emblem."
In the wake of concerns about the logo, new accusations have also now emerged that Sano submitted third-party photos alongside his logo materials, which he used without permission.
The committee has reportedly interviewed Sano, and will cease use of both the Olympics and Paralympics logo immediately.
It's the second round of controversy for the Tokyo 2020 Olympics, with the Japanese prime minister scrapping Zaha Hadid's stadium design in July, as a result of spiralling costs. The architect has now launched a campaign to reinstate the design.
The London 2012 Olympics logo, created by brand consultancy Wolff Olins, also found itself at the centre of debate, appearing on the front pages of British newspapers amidst claims its accompanying video was inducing epilepsy attacks.
Sign up for a daily roundup
of all our stories