By Elaine Lies

TOKYO (Reuters) - Tokyo 2020 Olympics organisers on Tuesday scrapped the Games logo over accusations of plagiarism, maintaining that it was not copied but saying too many doubts had been raised for it to be usable.

The unusual decision is the latest embarrassment for Japan as it prepares to hold the Games for the second time and follows its scrapping of plans for the new Olympic stadium, further blackening its self-proclaimed reputation as a "safe pair of hands" to host the sports extravaganza.

Questions about the 2020 logo arose immediately after its July unveiling when Belgian designer Olivier Debie said it was too similar to his logo for the Theatre de Liege and demanded its use be halted. He and the theatre subsequently filed a lawsuit in a local court.

Toshiro Muto, Tokyo 2020 CEO, said designer Kenjiro Sano continued to deny copying the emblem, but that he felt the public doubts about it were in danger of damaging the reputation of the Olympics, so he requested that it be withdrawn.

"We decided that to honour Sano's judgement and start working on a new logo was the most appropriate choice for resolving this situation," Muto told a packed news conference broadcast live on almost all television stations.

He apologised to the people of Japan, the International Olympic Committee (IOC) and to sponsors for "causing trouble", adding that a new logo would be decided as soon as possible and in open competition.

Sano said from the start that accusations he had plagiarised the logo announced on July 24 -- a stylised "T" with a red circle symbolic of Japan's flag -- were 'groundless', and Japanese officials backed him up, saying thorough checks had raised no legal issues.

But public concern grew last month after Sano's office asked a beer company to withdraw some designs for promotional goods, admitting that they had been copied. A survey by TBS television found that 85 percent of respondents felt the logo should be changed.

"Nobody can deny that the reputation of the logo has been tarnished. The responsibility for that lies with Mr. Sano," Tokyo governor Yoichi Masuzoe told reporters before the decision was made.

"I feel betrayed," he added.

Muto said design experts said the logo was not copied, citing numerous details. "But we also are concerned that ordinary citizens will not understand this," he added.

The fuss over the logo, which from the start received mixed reviews from the public, is just the latest mishap to befall Japan almost two years after it won hosting rights for the 2020 Games over Madrid and Istanbul largely on its can-do reputation.

Japan in July scrapped plans for its new national stadium, set to be the centrepiece of the Games, due to anger over ballooning costs, vowing to come up with a new, efficient design and build the facility as cheaply as possible.

A second competition for the stadium design is set to be held this year, with construction set to start early next year. Completion was set for early in 2020, a year later than planned.

The decision, virtually unheard of this late in the planning process, prompted concern from the IOC, which said it would oversee the new tender and warned that the stadium must be completed no later than January 2020 in order for tests and rehearsals.

Last week officials said they would slash construction costs by a third from previous estimates of $2.1 billion and meet the IOC's schedule.

Tokyo has also reneged on a pledge to keep most venues within eight kilometres of the Olympic Village in order to cut costs. Some are so far away athletes will have to stay in separate quarters.

(Editing by Sudipto Ganguly)