Sponsors threatened yesterday to withdraw from the Sydney 2000 Olympic Games as its organisation was plunged into uncertainty by hoteliers protesting a proposed bed tax.

Sydney Olympic Games Organising Committee (SOCOG) fear board member, Ian Armstrong said: "It could well cripple the Games."

The sponsors are concerned that hoteliers have halted negotiations with SOCOG over room rates and bookings for 17,000 beds needed for the Olympics. The hoteliers are angry at a 10 per cent tax on beds announced by the New South Wales state government last month