As Beijing was again cloaked in a dirty haze just hours before its opening ceremony, Fox Sports quoted Coates as saying that he hoped one of the legacies of the 2008 Games would be that China would take greater care of its habitat.
Asked if Games organisers had done enough to clean up the atmosphere, Coates said: "No. But I don't know what more they can do. This may well be permanent damage.
"Let's hope that's one of the legacies of these Games is the realisation of the damage that has been done and will continue to be done unless they are more careful,'' he added.
Coates, a senior IOC member who commands significant influence within the Games governing body, is the first member of the Olympic movement to criticise the outcome of Beijing's environmental strategies.
"The measures they have taken, by their standards, are probably very great. They have spent out of US70 billion dollars all up on the Games - 20 billion dollars towards green measures,'' Coates said.
Coates remarks came as the latest smog testing by Beijing Now at 9 a.m. showed pollution was still at extreme levels in the host city.
Beijing Now monitors showed 1880 micrograms of particulates per cubic metre - that's more than 26 times the Australian standard and 12 times the standard for developing countries.
Coates said the Australian team would be on smog alert for all endurance events, the first of which is the cycling road race featuring Cadel Evans.
Coates said despite the team's concerns, not one member of the Australian team had suffered any respiratory problems as a result of the smog.