Birmingham 2022 will instead use three 'campus' villages at universities and at the National Exhibition Centre to house athletes.
The games organisers said the decision to drop the plans for a single site village in Perry Barr, which would have cost £500m, was made in response to coronavirus and its effects on construction time.
There will be about 2,800 beds at the University of Birmingham, 1,900 at Warwick University and 1,600 at the NEC hotel campus.
Councillor Ian Ward, leader of Birmingham City Council, said they were "fully intending" to deliver the village prior to the pandemic.
He said: "The global pandemic has had an impact on capital schemes around the world, not just in Birmingham. We're not in a position to deliver the village anymore.
"This city has managed to come up with an alternative that will work.
"Many other locations around the world would not be able to do that, so it demonstrates what a fantastic city this is.
"We will still deliver the legacy of 2,000 new homes in the city which will help to meet the housing need.
"We were fully intending to deliver the village prior to the pandemic.
"We're still going to demonstrate to the world what this city and its people are capable of."
Councillor Ward said the board had discussed the option of delaying the games for a year.
He added: "There are a number of challenges around that, the most important is around the sporting element.
"We want to make sure we attract the Commonwealth's best athletes to the West Midlands.
"It was a compromise we were not willing to take in terms of moving the date."
The construction of the Sandwell Aquatic Centre has also been impacted, Councillor Ward said.
"Of course there's been an impact," he added. "We've done a review of that, the programme has been updated but today we're confident that venue can be delivered for the games.
"In Sandwell it will be the best aquatics centre in the country."
Ian Reid, chief executive of Birmingham 2022, said the transport plan will also need to be updated operationally.
He also said they are "still absolutely confident that the games and our ability to deliver them are still on course".
He added: "We are planning on putting a level of service at each of the venues the same as the village so the athletes won't miss out.
"We found at very short notice accommodation for 6,500 athletes and facilities to support.
"We don't believe we're making a major compromise here. We still believe we're putting in place a world-class solution.
"As I understand the university has existing accommodation suitable for para athletes, but that is one of our priorities to ensure the accommodation is suitable for para athletes."