Japan's preparations were dealt a blow last month when Prime Minister Shinzo Abe ordered plans for Tokyo's National Stadium re-drawn, robbing the tournament of its centrepiece venue.
The National Stadium, which is being re-built for the 2020 Olympic Games, was to host the final and key games in rugby's global showcase but will no longer be finished in time.
World Rugby issued a media release last week demanding Japan submit a new venues plan and an updated budget by September to provide assurances that the tournament would go ahead.
"I've read the World Rugby press release regarding the assurances they are seeking from Japan and it concerns me that this ultimatum may well be a precursor to World Rugby stripping Japan of the hosting rights," O'Neill said in comments published by The Australian newspaper on Monday.
"And indeed there has been some sentiment out of the UK in particular that the decision to award Japan the hosting rights in the first place was one that some would like to reverse."
