The mayor of Sochi, host of the Winter Olympics, has said there are no gay people in the city.
Anatoly Pakhomov said homosexuals were welcome at the Games - as long as they "respect Russian law" and "don't impose their habits on others".
Opposition leader Boris Nemtsov said there were several gay bars in Sochi.
In June 2013, Russia passed a law banning the promotion of "non-traditional" sexuality to under-18s - widely seen as an attack on gay rights.
The controversial new law made providing information on homosexuality to under-18s a crime, punishable by a fine.
Critics say its loose interpretation effectively stops gay rights protests in Russia.
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As far as I know there are several gay clubs in Sochi... how do they survive? Why they are not bankrupt? ”
Boris Nemtsov
Opposition leader
Anatoly Pakhomov, a member of President Vladimir Putin's United Russia party, told Panorama that gay people would be welcome at the Games.
"Our hospitality will be extended to everyone who respects the laws of the Russian Federation and doesn't impose their habits on others", he said.
But when asked whether gay people had to hide their sexuality in Sochi, the Mayor said: "No, we just say that it is your business, it's your life. But it's not accepted here in the Caucasus where we live. We do not have them in our city."
When challenged, the mayor admitted that he was not certain there were no gay people in Sochi: "I am not sure, but I don't bloody know them."
BBC Panorama reporter John Sweeney visited a gay bar in Sochi the night before he interviewed the mayor.
Most people did not want to be filmed and those that did were cautious about what they said.
Drag queen Madame Zhu-Zha said there was a gay community in the city and in other areas of Russia.
"There are very many clubs for gay people in Moscow - in Sochi we have two gay clubs as well. In some places there's serious prejudice against gay people. In other places it's not as bad."
The Sochi 2014 organising committee told BBC Panorama it was working hard to ensure the Games will be remembered for their diversity.
Boris Nemtsov, former Deputy Prime Minister and now a leader of the opposition, said the mayor's claim was laughable.
"As far as I know there are several gay clubs in Sochi.
"How do they survive? Why they are not bankrupt?"
Last week, President Vladimir Putin said homosexuals would be welcome in Sochi for the Olympics but said, "just leave the children alone".
"We don't have a ban on non-traditional sexual relations," he said. "We have a ban on the propaganda of homosexuality and paedophilia."
