The Spanish capital is one of three cities to be left in the running to hold the Games in eight years' time.
If the city was to be the location chosen to hold the global sporting spectacle, the Spanish economy would be given a helpful boost, according to the organising committee.
At a recent meeting in Quebec City, Doha in Qatar and Baku in Azerbaijan were dropped from the race to host the 2020 Games by the International Olympic Committee (IOC).
Madrid, Istanbul and Tokyo have been left to battle it out for the hosting rights.
All will be revealed by the IOC in Buenos Aires next September, when Olympic officials return their decision.
Spanish Olympic Committee president Alejandro Blanco was said to have told Spanish reporters: 'Madrid is committed to the Games as a factor for economic regeneration.'
The IOC report showered praise on Madrid's latest bid, after the city's previous unsuccessful bids to host the Games in 2012 and 2016.
Madrid's 'clear vision', along with good support from the public and the government and the fact that many of the required installations were already in the city, were all factors acknowledged by the IOC.
But the international committee said 'careful attention would need to be paid to Spain's economic outlook'.
Blanco stressed that the city's bid for the Games would be an 'investment' for Spain on a national level. 'Now starts the second half, which will be decisive. Third time lucky,' he said.
Madrid's mayor Ana Botella told reporters: 'Now I am convinced that this time we are going to have a winning project.
'I think now, more than ever, that the organisation of the Games is a strategic project for the country that will attract investment and unite everyone.'
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