Once controversial for its innovative, exorbitant design, Sydney's Opera House has become a treasured symbol for this vibrant Australian city. But once again, it is the subject of a divisive dispute.

Overlooking a shimmering blue harbor reputed to be the world's finest, the quay where the Opera House is located was a prison camp for some of Australia's first British settlers, who arrived here in 1788.

Almost two centuries later, Paul Robeson, the black American artist and activist, became the Opera House's first performer, singing to construction workers on the building site in 1960.

The finished masterpiece, an intricate array of gleaming white tiles sweeping upward like giant sails or shells, finally opened in 1973 after a tangle of funding problems and personal clashes that led the original architect, Jrn Utzon of Denmark, to resign seven years earlier.

Now, the debate centers on a neighboring development that has, as commentators say, generated more resentment than any other construction in Australia's history.

For many residents or "Sydneysiders," a new wave of "commercial crassness" is exemplified by the high-rise foreshore development that blocks some celebrated views of the Opera House. The first stage of the development, a 13-story apartment block owned by Hong Kong and Shanghai Hotels Limited, provoked fiery protests when construction began last year. International celebrities - including Elton John and U2 frontman Bono - have publicly sided with the opposition.

At the heart of the conflict is how Sydneysiders want their city to progress into the next century. In the rush to host the 2000 Olympics, new building developments have been proposed that detractors say will ruin the city's maritime charm. At a protest rally last year, Australian actress Judy Davis proclaimed, "The profit motive has taken over in Sydney."

In a city known for its love of the flamboyant, critics have likened the building's gray, nondescript appearance to a toaster. "To put 'just another building' there next to the Opera House is abhorrent," says Tony Rodi, a Sydney architect. He believes the city will attract strong criticism from Olympics visitors when they notice the wall of buildings beside the Opera House.

Mounir Bouchenaki, UNESCO's Cultural Heritage division director, has hinted that the new building's intrusiveness could jeopardize Australia's long-standing bid to get its monument on the World Heritage List - though the development's supporters don't take the threat seriously. The Architects' Council of Europe has also voiced concerns over the building's location.

"There has been no greater display of public opinion on any issue in Australia" than about the development at East Circular Quay, the Opera House site, says architect Neville Gruzman. He is a former president of the Save the East Circular Quay Committee that is circulating a petition, signed by more than 100,000 people in this city of 3 million, demanding demolition of the "toaster."

Other Sydneysiders say the debate has spun out of control, noting there was little public opposition when the state government approved the building plans in 1994.

Many architects support the development but have been silenced by the "hysterical" protests, says Jeremy Dawkins, an urban planning director at the University of Technology, Sydney. The critics, he says, "don't regard [the Opera House] as a working building but as a high-art icon that has nothing to do with them; that it should be set in the middle of the harbor to be looked at only by tourists."

David Brown, Sydney president of Australia's Institute of Architects, says the development will enhance the quay's lively "town square" image with an eclectic mixture of residents, operagoers, shoppers, and tourists.

Mr. Dawkins says the new building is smaller and more attractive than the "ugly" commercial offices it replaced. But critics counter that the apartment block is much closer to the Opera House.

Andrew Andersons, head of the architectural group that designed the building, recently announced that the style was blander and uglier than originally intended and promised to make small improvements that don't satisfy protesters.

Even John Howard, Australia's prime minister, announced his distaste for the development but rejected an appeal for the federal government to quash the project.

The protesters vow to keep fighting. And amid the controversy, both sides of the architectural debate have agreed on one issue: Obtaining World Heritage status for the Opera House and criticizing federal-government delays in submitting an application to UNESCO.

Mr. Brown, of the Institute of Architects, says future Australians may decide World Heritage status "is not so important ... [and] we should make all efforts now to see that it's preserved." He describes the Opera House as one of this century's most significant monuments because its style matches the environment. "Those extraordinary, visionary shells, in the context of the Sydney harbor - you immediately know it's just so right."

* Caryn Coatney's e-mail address is coatneyc@csps.com