The funding, approved by Orange County commissioners in a 5-2 vote, will come from tourist tax revenues and will be used to build the 18,000-seat, $81 million stadium for a new MLS expansion team, county and city officials said.
MLS President Mark Abbott said before the vote that he would try to finalise a franchise agreement with the Orlando City Soccer Club as soon as the financing was in place.
The stadium is to be located in a developing entertainment zone near the city centre.
"That's what we need for success, and we wouldn't want to be in a situation where we weren't successful," Abbott said.
His upbeat comments were echoed by Orlando City Soccer president Phil Rawlins, who said he now expects an MLS deal to be sealed quickly.
Football may be eclipsed by other attractions in a city that is home to the likes of Disney World and Universal Studios. But US interest in the sport has been growing since the country hosted the World Cup in 1994, and Orlando draws a steady flow of travellers from football-crazed nations overseas as well.
MLS, which began play in 1996, now includes 16 US teams and three in Canada.
An Orlando major league team would be the only MLS franchise in the southeastern United States. It would also be one of only four expansion teams planned by the league through 2020.
Two earlier MLS teams in Florida, the Miami Fusion and Tampa Bay Mutiny, were shut down by the league in 2002 due to financial losses.
Tax funding for the stadium is contingent on the ultimate award of a major league franchise. The so-called tourist tax is a six per cent charge on hotel rooms and other short-stay rentals which is limited by state law to financing of tourist-related enhancements including sports stadiums.
Besides the just-approved $20 million in tourist tax funding for the stadium, the club will kick in $40 million, Orlando's municipal government will contribute $15 million and the remainder will paid by other local municipalities, Rawlins said.
The club will pay the $70 million franchise fee, Rawlins said.
The deal raises to nearly $600 million the total bondable tourist tax revenue available to Orlando to complete development of its downtown entertainment district which began in 2007. The district includes a new performing arts centre and major renovations to the Florida Citrus Bowl stadium, both under construction, and the Magic's Amway Center which opened in 2010.
Orlando finance director Rebecca Sutton could not be reached for immediate comment on when any bonds backed by tourist tax revenues would be sold.