Sydney's successful bid to host the 2000 Olympics promised the most environmentally-friendly games in history, but few realised the proposed site was one of the most toxic in Australia.

Between 1949 and 1976, state government documents show that the Olympic venue at Homebush Bay was used as dumping ground for the deadly poison dioxin, a key ingredient of the Agent Orange defoliant used in the Vietnam War.

Environmental groups are worried. "Dioxin is probably one of the most dangerous, toxic chemicals that human beings have ever created," said Greenpeace campaigner David Bland. "Homebush Bay is now the dioxin capital of the world." Bland said dioxin levels at Homebush Bay are higher than those at Seveso, Italy, site of the world's first major dioxin accident in 1976. An explosion and chemical leak at a factory in Seveso, 12 miles north of Milan, on July 10th, 1976 released dioxin, killing farm animals and causing skin diseases among residents.

The carcinogenic toxin, which was originally produced at a nearby factory, has been found in 12 locations on the Olympic site, the documents say, including in an area adjacent to the Olympic village that will house more than 15,000 athletes and officials. Fishing has been banned in the area for seven years.

"We are inviting the rest of the world to the next Olympics, the least we can do is make sure the place is safe and clean and that we are living up to our commitment," Greenpeace campaigner Michael Bland said.

Meanwhile, there is more trouble brewing in Australia after a top Olympic official said yesterday that East German Ekkart Arbeit should not be given the job as Australia's new coaching director because of his questionable background. Kevan Gosper, an International Olympic Committee executive board member and vice-president of the Sydney Organising Committee for the Olympic Games, said Athletics Australia (AA) should buy out Arbeit's four-year contract to protect its athletes.

AA board members met yesterday to discuss the strong backlash from their selection of Arbeit as director of coaching after he admitted presiding over a regime which used performance-enhancing drugs in the 1980s. In a statement, AA said it reaffirmed its decision to appoint Arbeit and the board had complete confidence in the process by which he was appointed, including checks made on his background.

Arbeit was East Germany's throwing coach from 1982-88 and head track and field coach in 1989-90. He has denied giving athletes drugs directly, but admitted steroid abuse happened during his reign.

Gosper, a contender to take over from Juan Antonio Samaranch as the IOC's next president, said he had changed his mind after initially believing Arbeit should be given a chance to prove his credentials.

"I was inclined to say if a man's got the technical capacity, he should be given the benefit of the doubt, but I'm seeing far too much evidence coming through that he was there at the time and probably was involved (in performance enhancing drugs)."