A Cabinet meeting, chaired by Prime Minister Manmohan Singh, lent support to the autonomous Indian Olympic Association (IOA) to bid for the continental Games, information and broadcasting minister Jaipal Reddy said.
"Unless government backs it, the bid will not be taken seriously. Therefore, the Cabinet has given the green signal to IOA to make the best possible bid," Reddy said after the Cabinet meeting.
New Delhi twice hosted the Asian Games in 1951 and 1982 and is scheduled to hold the Commonwealth Games in 2010.
IOA president Suresh Kalmadi was delighted with the government's nod for the Games.
"The Indian capital will have all the infrastructure and facilities ready for the Commonwealth Games, so it will be easy to host the Asiad four years later," said Kalmadi.
"We will make a strong bid to get the Asian Games."
The 2006 Asiad will be held in Doha, Qatar, while the Chinese city of Guangzhou will host the 2010 event.