Russia has been forced to trim spending because of economic problems worsened by the collapse of global oil prices and economic sanctions imposed on Moscow over its role in the crisis in Ukraine.
A government decree said spending on the tournament would now be limited to 631.5 billion roubles ($11.8 billion) and Sports Minister Vitaly Mutko said most of the cuts would be in the number of hotels built.
"Of course it's a question of optimising the preparations. We're primarily taking out the excess hotels," he was quoted as saying by R-Sport, which is part of RIA news agency.
Dmitry Efimov, a representative in Russia for soccer's governing body FIFA, later told R-Sport: "This is a reflection of the difficult economic situation but this should not have a negative effect on the event itself."
President Vladimir Putin says he is confident Russia will host the finals despite investigations into alleged corruption at FIFA and how Russia was awarded the 2018 finals.
"We won in a free fight and we are going to host the World Cup," he told Reuters and other international news agencies in the city of St Petersburg on Saturday.
PERSONAL AND NATIONAL AMBITIONS
Putin will do all he can to ensure the finals are not taken away from Russia, especially as a presidential election is due in 2018 and he sees the tournament as a chance to showcase Russia as a modern state.
But Russia has lowered its sights in recent months after winning the right to host the finals with a bid promising new stadiums, hotels, training grounds and health facilities in addition to airport renovations and new high-speed rail links.
Before the new government decree, the World Cup organisers had already axed plans to build 25 hotels, cut the number of training grounds and reduced the capacity of some of the venues to save on building costs.
Building materials are now being sourced locally from Russian providers because of the rouble's decline against the U.S. dollar in the past year, pushing up construction costs.
Russia also hopes to avoid criticism over the price tag after the cost of hosting the Winter Olympics in Sochi last year soared and put the spotlight on Russia's problems with corruption and cronyism.
(Editing by Elizabeth Piper and Timothy Heritage)
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