RESIDENTS of high-rise flats in an area of Sydney close to the site of its Olympic park have being warned that their laundry is putting the city's bid for the 2000 Games at risk. Canterbury Council is investigating ways of preventing residents hanging laundry on their balconies because it could harm Sydney's profile in the lead-up to the bid decision. The issue has raised the ire of councillors who say the laundry gives the city a ''Third World image'', but angry residents say a balcony ban means their clothes will be stolen. The council's general manager, Jim Montague, said a report had been commissioned on the council's ability to stop residents using their balconies, and ways of increasing its powers. Mr Montague said the area, about five minutes' drive from Homebush Bay where it is planned to stage the Olympics, had numerous high-rise flats. The issue of unsightly washing on balconies has been raised before, but has taken on new urgency for some councillors because of the Olympic bid. ''Statements have been made about the possible effect this may have on the city's image in relation to the Olympic Games,'' Mr Montague said. ''Some aldermen felt it could make the area look unsightly but there was mixed opinion.'' The issue is a controversial one because numerous residents have had their washing stolen from shared clothes lines and resort to their balconies for security. Ms Nada Kalaoun, of the suburb of Lakemba, said: ''If you put your clothes on the line they're gone in five minutes. I have no choice but to use the balcony or else everything will be stolen.'' Mr Montague said he sympathised and that was why the council had commissioned the report rather than implementing an outright ban. ''The residents made a good point that there is a risk of expensive clothing hanging on communal lines getting stolen and this is why people use balconies and I can understand that.'' But some councillors say they have had numerous complaints from residents fearing for the city's image. ''This kind of image reduces morale and reflects on the entire area,'' councillor Tony Stewart said. ''It's a real problem - we have shown the world we are a modern, clean city in the lead-up to our bid with no problems associated with those in the Third World, yet we have this unsightly image on our streets.''