Over the next seven days, some 20,000 spectators will watch 13,000 athletes from nearly 80 countries, including Britain, compete in 31 events ranging from body-building to backgammon.

While the tournament is also open to heterosexual athletes, the participants will be overwhelmingly gay, lesbian, transgender and transsexual. Last night's three-and-a-half hour opening ceremony featured scantily clad dancers, an 800-strong choir, glittering costumes and live performances by kd lang and Jimmy Somerville. A motorcycle stunt team of 40 lesbians -- Dykes on Bikes -- performed against a backdrop of fireworks.

This year's highlights will include the Pink Flamingo Relay, a swimming event billed as 'a fun-filled afternoon for lovers of athleticism and high camp' and basketball games played between teams with names such as Good Vibrations and the London Cruisers.

Peter, 43, a Catholic priest from Duisberg, Germany, is competing in the volleyball and the marathon, despite having kept his sexuality secret from his church and parishioners. 'I think it's very important people who are not gay associate us not with problems and discrimination, but with positive things,' he says. 'Gays and lesbians should be proud of what they are.'

This is the sixth outing for the games -- which, like the Olympics, take place every four years -- and the first time they have taken place in the southern hemisphere. But unlike the Olympics, where winning is everything, the Gay Games are founded on principles of participation and inclusion. 'It's great to see that in an age where sport has become big business, it is still possible to stage an international sporting carnival where Olympians can compete with weekend warriors, straight grannies with young trannies,' says gay former rugby league player Ian Roberts.

At one point it looked as though the games were heading for disaster when the principal ticketing agency panicked, believing they were not viable, and froze more than A$2 million (£715,000) worth of sales. Organisers managed to hammer out a last-minute deal, with prominent gay businessmen agreeing to act as financial guarantors.

The games suffered another setback last month when national television network SBS withdrew from a plan to televise the opening ceremony and broadcast a nightly round-up. But organisers were putting those worries behind them last night. 'I have to admit there have been a few days when we thought it wouldn't get off the ground,' says Bev Lange, co-chair of the Gay Games board. 'But we've made it, and it's going to be huge.'

Coinciding with the games is a two-week gay cultural festival. With thousands of overseas visitors and athletes flying in, 'gay fever' -- to use the community's own parlance -- has well and truly hit the streets. While most of the visitors will stay in hotels, others will stay with local people in an initiative dubbed 'House a Homo, Bed a Dyke'. The Gay Games' organisers claim the event will pump A$100m (£36m) into the local economy.

At the Tool Chest on Sydney's Oxford Street, an Aladdin's cave of pornographic videos and sex toys, staff were bracing themselves for a busy few days. 'We've sold a lot of lube,' says the owner, a middle-aged man with a paunch and a ponytail who didn't want to give his name as a young woman shyly purchased an EZ Rider Rocket vibrator.

Some critics claim that, in an age of sexual equality and much greater tolerance, it is no longer relevant or necessary to champion the gay cause. Gay, they say, is passŽ. Gays and lesbians in Australia enjoy the same rights and go to the same clubs, so why make a big deal of events such as the Gay Games?

But many people point out that while places such as Sydney and Melbourne are tolerant, things are very different if you are gay and living in the Bush or in a small country town. And they are even worse if you come from a country where homosexuality is still outlawed. This week athletes are expected from Bangladesh, Croatia, Ecuador, Fiji, Morocco, and Rwanda.

But given the way homosexuality is accepted in Sydney, the biggest obstacle the competitors are likely to face is the heat. Today's temperature is forecast to hit 34ûC.