How Sydney's Lord Mayor plans to 'civilise' the seedy, star-studded world of its red-light district

Vittorio Bianci has made coffee for the likes of Stirling Moss, Jeremy Irons and Shirley Bassey during his 40 years behind the counter of the Piccolo Bar, an old-fashioned Italian café in the heart of Kings Cross, Sydney's red-light district.

"Jeff Buckley fell asleep drunk in that corner," says Mr Bianci, gesturing at one of the worn leather banquettes. "Marianne Faithful once gave me a bunch of flowers."

The tiny café has been a favourite haunt of visiting celebrities since the 1950s, when "the Cross" was a bohemian place, home to actors, musicians, writers and poets. But the area long ago lost its raffish charm.

The smoky jazz dives have been replaced by sex clubs and tawdry souvenir shops. Scrawny prostitutes linger in doorways. Residents step over discarded needles on their way to buy a pint of milk.

Now civic authorities have decided enough is enough. Determined to halt the Cross's downward slide, they are planning a programme of public works aimed at "civilising" the neighbourhood. Pavements are to be widened, trees planted, lighting improved. Flower boxes are to be installed. A new community centre and library will be built.

Some locals welcomed the project as long overdue, but others are less enthusiastic. They deplore the area's seedy image and its entrenched drug problem, but they fear the clean-up will accelerate a gentrification process threatening to eradicate the last vestiges of Kings Cross's colourful past.

Large swaths of the inner-city district have been bought up by developers and turned into expensive apartment blocks with harbour views. Traditional businesses have been forced out, unable to afford soaring rents. While teenage heroin addicts shoot up in back alleys, smart bars and restaurants are sprouting. There is talk of Gucci moving in. Kings Cross is a schizophrenic place.

In the Piccolo Bar, where signed photographs of illustrious patrons cover the walls, 68-year-old Mr Bianci abandons his usual wisecracking to reflect on the changes to his neighbourhood. "It's dirty now and it's horrible," he says. "All the artists have moved out because it's no longer cheap."

Ken Fox, a regular customer for 30 years, pauses mid-cappuccino to agree. "They're tarting up the place, but they're destroying all the things that give it character," he says.

The Cross is Australia's most densely populated area, with 33,000 people living in one square kilometre. Many locals retain a deep attachment for it, despite the crowds of thrill-seekers who pour in every night and the stench of stale beer and vomit that greets pedestrians in the cold light of morning. Long-term residents fondly remember the days when eccentric characters would wander along the main street in their pyjamas, reading a newspaper.

Credit for the regeneration project is being claimed by Frank Sartor, the charismatic Lord Mayor of Sydney, although it was devised by a different council before boundary changes. Mr Sartor, who is of Italian descent, is touted as Sydney's answer to Rudolph Giuliani, the former New York mayor who cut crime there.

The two men met a decade ago and reportedly got on like a house on fire. Mr Sartor has a crystal Big Apple, a gift from Mr Giuliani, on his desk. His plans for the Cross invite inevitable comparison with the facelift given to Times Square.

Mr Sartor says: "The whole idea is to make a cultural shift in the thinking about the Cross. We will be attacking all corners of Kings Cross in terms of making sure it becomes civilised and safe and pleasant."

The Piccolo is among a handful of long-established businesses that have survived. Near by is a hairdresser, where Joe Bardetta, a 66-year-old Sicilian, has been trimming famous customers since 1967. Frank Sinatra is among those who have perched on his green leather barber's chair.

Mr Bardetta wants to see the return of the chic boutiques for which the district was once renowned. "It's all sex shops and fast food now," he says. "You get a different class of people coming in." In truth, the Cross has always been disreputable. Razor gangs fought over the cocaine trade here in the 1930s, and brothels operated in back streets. But when American servicemen on leave from the Vietnam War arrived en masse in the 1970s, the area lost its harmless risqué air and turned downright sleazy. That era was the heyday of the Bourbon and Beefsteak, a late-night bar and restaurant that became a local landmark. But it, too, might soon disappear. It is up for sale and could be converted into flats.

The sex industry came to Kings Cross, rumour has it, after a brothel owner in neighbouring East Sydney was killed by a car bomb planted by a rival. He left his 20 premises to the RSPCA, which sold them to residential developers. Other entrepreneurs seized on the gap in the market and moved into the Cross.

The trade is no longer discreet. The Pink Pussycat, Treasure Chest and Love Machine are among a dozen or so strip clubs clustered on the main thoroughfare. Sharp-suited men stand guard on the pavement, extolling the virtues of their girls and urging passers-by to step inside.

If Mr Sartor has his way, these "spruikers" could vanish from the landscape. They have already been subject to a two-month experiment during which they were forced to wear colour-coded identification badges and restricted to a coloured semi-circle painted on the footpath outside their clubs. Now there are moves to ban them.

Stephen Carnell, manager of a local business group, said: "The character of the place is not going to change. There is a tendency to romanticise the Cross, but really it's seedy and sad. The improvements will allow its bohemianism, long since tarnished, to shine again."