France and South Africa are two of the remaining three bids along with Ireland
Italy has withdrawn its bid to host the 2023 Rugby World Cup.
Announcing the decision, the Italian rugby federation said they had consulted with government and the Italian Olympic Committee.
With Ireland still in the running to host the tournament, it comes as a boost to IRFU's chances of securing hosting rights.
“Our candidature has always been strictly connected to the Olympic Games bid for Rome 2024 and, as agreed with the Goverment and the Olympic Committee, we are unable to provide necessary commitments for us to move forward," said federation president Alfredo Gavazzi.
"We remain convinced of the strength of our bid and are well aware of the benefits that hosting the Rugby World Cup would have brought to Italy. We’re conscious to lose a fantastic chance to promote our values and our sport in our country, but we must sadly accept that today we can no longer move forward with our bid."
With Italy pulling out of the race to host the 2023 World Cup, it leaves Ireland, 2007 hosts France and 1995 hosts South Africa in the running.
The tournament hosts will be revealed in 2017.
The next World Cup, which takes place in Autumn 2019, will be hosted by Japan.