By Ray Furlong BBC, Leipzig

A bid by the German city of Leipzig to host the 2012 Olympics has received a blow after it emerged that the head of the public relations company promoting it had worked for the former East German secret police.

The city immediately stopped working with the company, but the news followed the resignation of two other senior officials working on the Olympic bid, after similar allegations.

Leipzig is trying to highlight its role in communism's downfall

Leipzig's campaign to stage the games draws heavily on its history as the centre of demonstrations in 1989 that brought down the communist regime, making these scandals deeply embarrassing.

The city's Olympic bid portrays it as a lively, prosperous city at odds with the grim image of the former East Germany, and recalling with pride the street protests that brought down the communist regime.

But now, the campaign is in crisis.

The head of the PR company handling the bid admitted working for the secret police, the Stasi, in the 1980s.

Damage done

Leipzig's immediate decision to stop working with the company did not stop the damage being done.

Earlier, the head of the city's Olympic bid committee had resigned after allegations, which he denied, that he had worked for the Stasi.

And the head of the bid for Rostock, a town on the Baltic sea where sailing events would be held, has quit for the same reason.

Leipzig believes it can only win the 2012 Games with a clean image of post-communist renewal.

But it was always an outside bet against competition like New York, Paris, or Beijing, and after this week its chances look even slimmer.