To give the prize cans the weight of normal cans - to prevent consumers from picking out the MagiCans - a sealed area within the cans is filled with water - plus chlorine and foul-smelling ammonium sulfate to discourage drinking.

But in some cans, the pop-up mechanism malfunctions or a faulty seal releases some chlorinated water into the can itself. When Coca-Cola received complaints about the faulty cans, it temporarily halted distribution of the MagiCans to local bottlers. All MagiCans that are now being distributed are shaken to detect faulty mechanisms.

Coca-Cola still plans to randomly distribute about 750,000 MagiCans among the 200 million cans of Coca-Cola Classic in circulation at any one time. Mr. Donaldson said perhaps 120,000 MagiCans are on store shelves or in bottler inventories, and less than 1 percent, or fewer than 1,200 cans, are faulty.

Coca-Cola said it had received fewer than 25 consumer complaints about the cans.

Rival Promotion

The promotion's difficulties are all the more embarrassing for Coca-Cola because its archrival, Pepsico Inc., is mounting a similar promotion without the problems. Its ''Cool Cans'' offer cash and prizes, but a consumer gets a can with a beverage and no complicated push-up device. At the bottom of the prize can is a number corresponding to the cash won, from $25 to $20,000. The consumer calls an 800 number to get the prize.

The Coca-Cola spokesman said the MagiCans could not be recalled because there are no serial numbers or other distinguishing marks on them. ''To us, recall is a non-issue,'' he said. Coca-Cola first announced the Magic Summer '90 campaign in March by sending MagiCans containing currency to journalists. Some journalists wrote that it was questionable for a big corporation to mail cash to reporters.

The latest controversy arose out of an incident on May 8 in North Andover, Mass. Zachery Gendron opened a MagiCan, which then ''exploded,'' according to a police report. He nonetheless took a small taste of the liquid but then spit it out. His parents alerted the police, who got in touch with Coca-Cola officials in Atlanta and state health officials in Boston.

The Massachusetts Department of Public Health determined that the water was not harmful, containing about two parts per billion of chlorine (less than the amount in a typical swimming pool).