TV presenters struggled to rein in their emotions, while newspapers rushed out special editions. Olympians yelled "banzai!" and a rainbow emerged through the drizzle as Tokyo greeted the news that it had been chosen to host the 2020 Olympics.

Jacques Rogge, the president of the International Olympic Committee (IOC), had barely finished uttering the city's name thousands of miles away in Buenos Aires when thousands of Tokyoites began celebrating. There were hugs, tears, and relief that the Games were coming to their city for the second time.

The 2,000 supporters who had gathered at a gymnasium near Komazawa stadium – built for the first Tokyo Olympics in 1964 – cheered as the IOC's decision was relayed via a big screen. Gold ticker tape fell from the ceiling while TV reporters struggled to make themselves heard.

Some had stayed up all night for the announcement at 5.20am local time; others woke early, buoyed by the news that Madrid – long seen as Tokyo's main rival – had been squeezed out by Istanbul in the first round of voting.

After a two-year campaign that has been far from trouble-free, the jubilation was matched by a huge sense of relief.

Celebrations in Tokyo. Photograph: Christopher Jue/EPA

In recent days, Tokyo's bid appeared to be fading amid a slew of bad news from the Fukushima Daiichi nuclear power plant, 140 miles to the north.

But enough of the 96 voting members of the IOC – if they had any doubts about Fukushima – were won over by 11th-hour assurances from Japan's prime minister, Shinzo Abe, that radiation from the destroyed plant posed no threat to Tokyo. "Let me assure you the situation is under control," said Abe, who had left the G20 summit in Russia early to make Tokyo's final pitch. "It has never done and will never do any damage to Tokyo."

In the end, the margin of victory – 60 votes for Tokyo to Istanbul's 36 – was wider than Japanese bid officials could have dared hoped for.

"My heart was pounding before the announcement – I am so happy," Abe said, adding that Japan would respond to the support it received "by holding a successful Games. I think we conveyed the message that we can hold a safe Olympics."

Mitsushi Matsufuji, a company worker who ran from his home to Komazawa to watch the announcement, said the decision had given Japan "courage and hope, especially after the March 2011 disaster". He added: "I'm willing to trust the government to take care of the problems in Fukushima. It's going to be tough to organise the Games, but this is our chance to tell the rest of the world that Japan is OK."

Shinzo Abe, third from right, celebrates the news with the Tokyo 2020 delegation. Photograph: Yan Walton/AFP/Getty Images

In another part of the city, more than 1,200 Olympic athletes and dignitaries crammed into a convention hall greeted the news with the traditional victory cry of "banzai!"

"This is a credit to the efforts of the entire nation," said Saori Yoshida, a three-time gold medallist in women's wrestling and a bid ambassador. "The chance to see the highest level of sport live is a great chance for everyone, and as an Olympic athlete I'm thrilled."

Having offered assurances that the Fukushima water leaks posed no threat to the health of greater Tokyo's 35 million residents, Abe is expected to come under renewed pressure to address the mounting problems at the plant.

In the two and a half years since a tsunami on Japan's north-east coast killed almost 19,000 people and made hundreds of thousands homeless, the recovery effort has been blighted by bureaucratic bungling and a lack of leadership.

Some among the 160,000 people who were forced to evacuate after the tsunami triggered a triple meltdown in Fukushima plant said the billions of dollars earmarked for Tokyo 2020 would be better spent on fixing the leaks and decontaminating their irradiated home towns. Repeated official assurances that Tokyo is safe "only serve to show that the situation in Fukushima is serious", a woman who was evacuated from Fukushima to Tokyo told the Mainichi Shimbun before the vote.

People spell out the words 'thank you' at the Tokyo metropolitan government building. Photograph: Kyodo/Reuters

Last month, the plant's operator, Tokyo Electric Power, admitted that about 300 tonnes of contaminated groundwater were flowing into the Pacific every day. Then, in what some feared could deal a decisive blow to Tokyo's Olympic prospects, news emerged of more leaks from several tanks used to store contaminated water.

The 1964 Tokyo Games, held less than 20 years after Japan's defeat in the second world war, signalled the country's emergence from the shadow of militarist misadventure and the start of a period of rapid economic growth.

Some have questioned Tokyo's decision to bid again after unsuccessful attempts for the 2012 and 2016 Olympics, given the size of Japan's public debt – now more than twice the size of its $6tn economy. The Tokyo Olympics will use refurbished venues and several new sports arenas. Along with infrastructure projects, the bill has been estimated at just under $8bn (£5.1bn). The city already has $4.5bn in an Olympic reserve fund.

Hosting the 2020 Games could produce positive economic effects of more than $40bn and create more than 150,000 jobs, according to SMBC Nikko Securities.

Japanese companies will benefit from rising demand in the construction sector, with an expected boom in sales of consumer electronics and other items. The government hopes to attract 8.5 million tourists during the event.

The Japanese delegation celebrates in Buenos Aires after Tokyo won the bid to host the 2020 Olympic Games. Photograph: Xinhua/Landov/Barcroft Media

In response to concern about finances, bid officials promised a compact "downtown Games" with most of the venues located close to the athletes' village. The events will centre on the main Olympic stadium – a futuristic 80,000-seat arena due for completion in time for the rugby World Cup in 2019. While doubts linger about Japan's ability to clean up the Fukushima plant, there is no questioning the country's Olympic pedigree: the Winter Games came to Sapporo in 1972, and to Nagano in 1998.

New stadium



When the Olympic Games in Tokyo is declared open, the ceremony will take place in a striking stadium designed by British architect Zaha Hadid. The $1bn stadium, which has a retractable roof, has been described as a cross between a giant bicycle helmet and an alien spacecraft and will provide a common link between the London 2012 and Tokyo 2020. While much of Tokyo's bid stressed the certainty and safety of its plans, commissioning Hadid to redesign the Kasumigaoka national stadium was a bold statement, closer in scale of ambition to Beijing's iconic Bird's Nest than London's pared-down design. Hadid, whose signature curves and bold designs adorn a growing range of cities from Beijing to Baku, also designed the undulating £251m Aquatics Centre for the London Games. The venue, which spiralled in cost due to the ambitious design, incorporated temporary wings on either side that have now been removed. Construction is due to begin in 2015.The original stadium, now almost 50 years old, hosted the 1964 Olympics.

"The design is both light and cohesive, seamlessly connecting the stadium's different elements to create a silhouette that integrates with the city," Hadid said when she won the commission.

The architect was not the only British link to the Tokyo bid. A company founded by consultant Nick Varley, who worked on earlier successful bids for London and Rio, co-ordinated the presentation, speeches and bid literature that were a key component in Tokyo's success after two previous bid failures. Owen Gibson