Air pollution remains a significant challenge for the 2008 Beijing Olympics, according to a United Nations environmental report released Thursday, but Beijing officials expressed confidence in handling the problem.

The independent appraisal follows a report this month by the Beijing Organizing Committee for the Games of the XXIX Olympiad (BOCOG) that about 120 billion yuan ($16 billion) had been spent on environment-related projects from 1998 to 2006.

Achim Steiner, executive director of the United Nations Environment Programme (UNEP), said that funds for improving the environment "appear to have been well spent".

The money will be even more well spent if the measures undertaken were adopted across the country as a "real and lasting nationwide legacy", he said.

The UNEP's report praised the city for waste management, cleaner transport systems, water treatment capabilities and creating urban green belts including the 580-hectare Olympic Forest Park.

However, concerns remain over air pollution, most of which is "exacerbated" by the city's geographical location. The report said that surrounding mountain ranges block air circulation and prevent the dispersion of pollutants.

The levels of small particles in the atmosphere, which are hazardous to health, have at times exceeded World Health Organization air quality guidelines.

The excessive use of coal and a rising number of new vehicles have slowed the pace of air quality improvement, and the goal cannot be achieved over a short period, the UNEP said.

But Khalid Malik, the UN representative in Beijing, said: "You have to bear in mind this is the first time the Olympics is being held in a developing country".

Beijing has committed to a cleaner Games and long-term environmental quality with major polluting factories in the capital relocated or refitted, among other measures.

"Beijing has accelerated building of urban infrastructure suitable for sustainable development," Yu Xiaoxuan, deputy director of BOCOG's construction and environment department, said.

Yu said air quality will meet Games standards.

The report Thursday praised BOCOG for accelerating the phasing out of ozone-depleting chemicals and promoting energy efficiency and green energy appliances in buildings and sports venues.

Officials from the International Olympic Committee (IOC) are also confident that air pollution can be adequately addressed.

"The IOC was well aware of the air pollution issue as early as seven years ago when Beijing was bidding for the Games. We can only say that six years later, they (BOCOG) lived up to their commitments," said Hein Verbruggen, chairman of the IOC Coordination Commission for the 2008 Games, which concluded a three-day inspection of Beijing's preparations Thursday.