Officials have deemed the athletes' village as 'unliveable' and unsafe due to major plumbing and electrical hazards just a fortnight before the Olympic Games are due to open.
Blocked toilets, leaking pipes, exposed wiring, darkened stairwells where no lighting has been installed and dirty floors are among the reported problems at the complex in Rio.
The Australian Olympic team have boycotted the village after officials deemed their assigned apartment tower blocks uninhabitable.
Athletes, who were due to start arriving on Monday, will now be relocated to hotels over the next three days until the problems are fixed.
New Zealand, Great Britain, USA and Italy are experiencing similar issues in their accommodation.
Australian Olympic boss Kitty Chiller said she decided no Australian team member would live in the allocated building after tests revealed a variety of problems with gas, electricity and plumbing.
"Water came down walls, there was a strong smell of gas in some apartments and there was 'shorting' in the electrical wiring," she said.
"We have been living in nearby hotels because the village is simply not safe or ready."
She said they had been raising the concerns daily with the International Olympic Committee.
"For over a week now Australia Olympic Committee staff have been working long hours to get our section of the village ready for our athletes," Ms Chiller said.
"For those athletes arriving in the next three days we have made alternative accommodation arrangements."
Extra maintenance staff and more than one thousand cleaners have been deployed to fix the problems and clean up.
There is no indication of when the accommodation will be ready.
The mayor of Rio de Janeiro Eduardo Paes hit back at Australia's criticism of the athletes' village by joking about kangaroos.
He also said Rio's village was nicer than the one in Sydney at the 2000 Olympics.
"This village is better than (the Olympics) Sydney (in 2000)," Mr Paes was quoted by Brazilian media outlet Folha as saying on a visit to the village on Sunday.
"As hosts, what we want is for everyone to feel at home. It is natural that you have some kind of adjustments to do, but we will make Australians feel at home here," he said.
"I almost feel like putting a kangaroo in front of their building to make them feel at home.
"Adjustments that have to be made will be made, and we will have the appropriate structure."
Australian Olympic Committee spokesman Mike Tancred hit back saying the team needed plumbers and not kangaroos.
A spokesman for the British delegation said they had encountered "some maintenance difficulties" since moving in a week ago.
British athletes were being put up in a preparation camp in the city of Belo Horizonte for "acclimatization and training" and would not immediately need the village, he said.
The United States Olympic Committee acknowledged there were small problems.
"As is the case with every games, we're working with the local organizers to address minor issues and make sure the village is ready for Team USA athletes," spokesman Patrick Sandusky told AP.
Carlo Mornati, the Italian Olympic team leader, said that some areas of the village were still not ready and that his national Olympic committee, CONI, had been hiring workmen to carry out repairs for days.
The 31 new residential towers, which each have 17 storeys, are where nearly 11,000 athletes, as well as some 6,000 coaches and other officials will sleep, eat and train at the upcoming Rio de Janeiro Olympics.
The complex, described as a 'city within the city,' includes a massive cafeteria and gym, a post office, a first aid centre and bank.
The village has been described as the largest in Olympic history.
While athletes are not required to stay in the village - and indeed many of the biggest-name stars may end up staying in alternative housing outside the complex - organisers said the village will be the highest-security facility of a games patrolled by 85,000 police and soldiers.
That is twice as the number of security forces as at the 2012 games in London.
A double fence will ring the perimeter of the complex, and everyone coming in and out will be subject to airport security procedures, complete with X-rays of all incoming bags and luggage.
All the bedrooms are doubles, kitted out with two beds that can be extended out to 2.3 metres for the tallest athletes, as well as what appeared to be a disposable wardrobe made out of fabric stretched over a metal frame.
In the living room, there are a few basic armchairs and a clothes drying rack.
Crucially, the apartments all come with airconditioning units and electric mosquito-repelling apparatuses - aimed at preventing the spread of the Zika virus, which has been linked to a surge in Brazil cases of the birth defect microcephaly.
The criticism of the athletes' village was another embarrassing blow for host Brazil, which is struggling to show all will be well with the 2016 Olympics to open August 5, despite low ticket sales and general public apathy amid a deep recession.
Fears for the safety of athletes have also been raised after two members of the Australian Paralympic sailing squad were robbed at gunpoint.
Last month, Paralympic sailor Liesl Tesch and team official Sarah Ross were confronted by two men while riding their bicycles in at Rio park.
One of the men was carrying a pistol and the women were robbed of their bicycles.
The latest problem to beset the Olympic Games comes on the same day that Russia tentatively awaited a decision by the IOC on whether the country's entire team would be banned from competing at Rio.
This follows a damning report last week which revealed state-sponsored doping of athletes in Russia up and including the 2014 Sochi Winter Games.
All members of Russia's track and field team have been banned from taking part, but the rest of the team will be allowed to attend.