when i program and run the HEX file which blinks the LED and which i have downloaded from the internet it works fine

I assume it works on both micros

but when i compile and run the program with SDCC compiler then it does not run

Two questions here

1) Which program? your own or the source code of that hex file which runs?
2) Does it run on 89C2051 and not on 89C51 after compilation?

is there any indication by 89c51 that its running my code other than the LED

Yes, when i started 8051, i had no emulator. If you have a spare port, you can set and clear certain bits in certain portions of the software, indicating that where the CPU is wandering in your code.

IA