My WICED-SDK Version : Wiced_006.002.001.0002.
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Can you please confirm if you are using CYBT-343026 or not?
wiced_rtos_delay_milliseconds function is not exposed/ supported for 20706 . You may have to use timers for delay.
Please refer to gpio snip ( /20706-A2_Bluetooth/apps/snip/hal/gpio ) as reference for toggling LED .
Also please note, don't use while(1) loop inside Application_start.