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Older buses, taxis and cars, the report says, have been scrapped in favor of ones powered by compressed natural gas or new vehicles and fuels that meet tougher, internationally recognized emissions standards such as the Euro III standard.

Between 2000 and 2006, concentrations of several key air pollutants including sulphur dioxide and carbon monoxide have as a result fallen.

But with more than 1,000 new cars being registered daily and with coal remaining a key energy fuel, some key pollutants remain stubbornly high.

"The city's geographical location exacerbates the problem. The mountain ranges that surround Beijing block air circulation and prevent the dispersion of pollutants. Compounding the problem is the high number of dust storms. In the spring of 2006 the city endured 18 dust storms," says the UNEP assessment report.

Beijing is also expanding surface and underground rail lines with four completed and four more, including the Olympic Line, currently under construction.

The UNEP report urges the local authorities to adopt measures and incentives to bridge the gap in order to improve air quality and other environmental measures.

Steiner said the report was a balanced assessment recognizing the achievements but also highlighting how more could be done to, for example, harness the city's new and existing public transport infrastructure.

The study also flags up concerns over voluntary environmental arrangements between contractors, hotels, caterers and providers of transport and the organizing committee.

"Vigilance will need to be the watchword to ensure last minute corners are not cut in the area of environment in order to meet deadlines. Meanwhile, the question of offsetting greenhouse gas emissions within China also remains an open question," said Steiner.

"However, Beijing has already achieved a great deal, an achievement even more resounding when one reflects on the enormous challenges facing one of the world's most rapidly growing developing economies and its principal cities, " he said.