I have a BEGIN...EXCEPTION...END block like
BEGIN
......
EXCEPTION
WHEN OTHERS THEN
RAISE NOTICE SQLERRM;
RETURN 0;
END;
that gives this error during CREATE FUNCTION:

ERROR: syntax error at or near "SQLERRM"
LINE 220: RAISE NOTICE SQLERRM;

What am I doing wrong?

thanks

You apparently cannot use a variable directly in a RAISE statement. Try:

RAISE NOTICE '%', SQLERRM;

Thanks- I'll try that. BTW does '%' do anything special other than just preceding SQLERRM with dummy text?

The RAISE statement takes a string which becomes the message it will display:
RAISE EXCEPTION 'Invalid values!';

Variables can be inserted into the string using percent signs:
RAISE EXCEPTION 'Invalid values: %, %, %', val1, val2, val3;

PostgreSQL: Documentation: Manuals: PostgreSQL 9.0: Errors and Messages