Singapore's reputation as a gay-friendly metropolis has taken a hit after police banned an alternative festival coinciding with the city-state's 40th independence day celebrations in August.

The Nation party, which drew international revellers the previous four years, will instead be held in the Thai resort of Phuket in November after Singapore police ruled such an event would be "contrary to public interest".

The ban took place after the festival was linked by a senior health official to a spike in HIV infections last year, which angered the gay community. Singapore celebrates its independence every August 9, with the Nation beach party, organized by gay website fridae.com , providing an offbeat contrast to the traditional military-led parade attended by local and foreign dignitaries.

"We are disappointed that the authorities have deemed a National Day celebration by Singapore's gay citizens as being 'contrary to public interest,' when it had previously been approved four years without incident," said fridae.com chief executive Stuart Koe.

"This is a direct contradiction to previous calls for embracing of diversity." Discrimination against homosexuals appeared to be easing after then Prime Minister Goh Chok Tong said in July 2003 that gays were already allowed to hold civil service positions, remarking that "they are like you and me."

Taking their cue from Goh, gay groups became bolder and businesses began courting what was perceived to be a hip and affluent gay market -- the so-called "pink dollar" -- as well as gay tourists from across Asia.

However, after Goh stepped down in August 2004, his successor Lee Hsien Loong made it clear there were limits to what gays can do in public. A planned Christmas Day party also organized by fridae.com last December was banned because it was deemed to be "contrary to public interest."

"It does seem that there has been a change in policy and it doesn't look very heartening," said Alex Au, a co-founder of gay rights advocacy group People Like Us.

The ban on the Nation party came three months after Senior Minister of State for Health Balaji Sadasivan said the festival may be behind a sharp rise in the number of new HIV infections in Singapore.

He said an an epidemiologist had suggested that the party "allows gays from high prevalence societies to fraternise with local gay men, seeding the infection in the local community." A record 311 people contracted HIV - the virus that causes AIDS - last year in Singapore, up 28 percent from 2003 and a high number for a republic with just 3.4 million citizens and permanent residents. But Au questioned the logic of banning the Nation party on health grounds.

"Even if epidemiology is a factor, now that they have moved to Phuket, is that factor eliminated? Singaporeans will simply be flocking to Phuket with the cheaper air fares and I suppose cheap accommodations because of the tsunami," he said. "It would be wilder because they are outside Singapore's jurisdiction.

They might be more reckless." But there are cultural and political reasons for the government's refusal to allow an openly gay festival to flourish here.

Singapore officials have maintained that despite rapid economic progress and the impact of cultural globalisation, most ordinary Singaporeans --popularly known as the "heartlanders" - remain conservative. A study by researchers at a local university supports this view.

"Singapore's government is in touch with the majority of Singaporeans," said Mark Cenite, an assistant professor at the communication school of Singapore's Nanyang Technological University.

"The majority of Singaporeans hold negative attitudes toward gay men and lesbians," said Cenite, who was part of the research team. Telephone interviews of some 1,000 respondents showed 68.6 per cent of Singaporeans had a negative attitude toward gay men and lesbians, 22.9 per cent had a positive attitude and 8.5 percent were neutral, he said.