A new host is needed for the 2026 Commonwealth Games after the Australian state of Victoria announced on Tuesday it was pulling out.

Here, the PA news agency takes a closer look at the key issues in this story.

What has happened?

At a 3.30pm meeting in London on Monday, a Victoria state government representative informed the Commonwealth Games Federation it was withdrawing as hosts of the 2026 Games. Eight hours later, Victoria state premier Daniel Andrews went public with the news, citing estimated costs which were way above original budgets – he claimed up to seven billion Australian dollars (£3.6bn).

What happens next?

Before consideration is given to who can step in as hosts, the CGF must first agree a compensation settlement with Victoria. PA understands the CGF has already received half of its hosting fee and all of the development grant for 2026. Victoria has now entered into discussions with the CGF on settling its outstanding obligations.

“We entered into a contract with (Victoria) to deliver a Games. They are defaulting on that contract,” CGF chief executive Katie Sadleir said.

“There are a series of clauses that articulate the kind of cash flows that would have happened if the Games had gone on. We are sitting down to look at options to come to a resolution that we will be happy with.”

So who could host?

Sadleir says all options will be considered, including the UK.

“The UK are fantastic hosts and we would be very open to having a conversation with them about it, if that’s something they would be interested in doing,” she told the PA news agency.

UK Prime Minister Rishi Sunak’s official spokesman said he hoped a “viable solution” could be found for Australia to host the Games. Asked if the British Government would encourage a UK bid, the spokesman said: “We are getting slightly ahead of ourselves.”

Hasn’t this happened before?

Not quite. Durban had the right to host the 2022 Commonwealth Games stripped from it in 2017, with Birmingham ultimately winning the race to replace the South African city as hosts.

Doesn’t Victoria’s decision prove that staging Commonwealth Games has just become too expensive?

The costs set out by Andrews on Tuesday, if correct, are eye-watering and way above the cost of staging Birmingham 2022 (put at £778million by the British Government).

However, the CGF argues Victoria’s approach to hosting was a factor in some of those costs – it chose, for example, not to use existing sports facilities in Melbourne in favour of developing temporary sites in the regional state hubs it planned to use for the Games.

Victoria was the first Games host that was able to benefit from a new CGF hosting ‘roadmap’ which, among other things, reduced the number of compulsory sports from 16 to two and removed the requirement to provide a bespoke athletes’ village.

The British Government and Birmingham City Council would disagree that staging a Games is necessarily a money pit.

An independent report published in January this year said Birmingham 2022 had contributed £870.7m to the UK economy, with over half the economic impact generated (£453.7million) benefiting businesses and communities across the West Midlands.

Does the Commonwealth Games have a future?

Victoria’s withdrawal will again spark a debate about the relevance of the Games in the modern world. But organisers have worked hard to provide hosts with flexibility on hosting to keep costs to a minimum, while the CGF is keen to work with international sports federations on providing a global showcase for their new innovations.

Birmingham 2022 broke new ground with the introduction of 3×3 basketball, with T20 women’s cricket also making its debut at a multi-sport event and setting world attendance records.