French PM 'hurt by terrible lies'

Villepin went on French radio to deny the allegations

French PM Dominique de Villepin has been defending himself against claims he ordered a corruption inquiry targeting his rival Nicolas Sarkozy.

Mr de Villepin told parliament he had been the victim of a "terrible campaign of slander and lies".

He has refused to resign and denies that he asked for Mr Sarkozy - the interior minister - to be investigated.

Mr de Villepin and Mr Sarkozy are rivals to represent the centre-right in next year's presidential election.

But both say they have been victims of smear campaigns to undermine them.

The prime minister has called an extraordinary cabinet meeting ahead of the regular weekly ministerial gathering held on Wednesdays with President Jacques Chirac.

[This] campaign has profoundly shocked and wounded me. Enough is enough Dominique de Villepin Clearstream scandal timeline

"I have served my country for 30 years," Mr de Villepin told the National Assembly. "I've been the victim in recent days of a terrible campaign of slander and lies, a campaign which has profoundly shocked and wounded me. Enough is enough," he said.

"Nothing will divert me from my duty as prime minister in the service of the French people."

Earlier he said that as foreign minister in 2004 he ordered an inquiry into claims against interior ministry officials, but did not specifically target Mr Sarkozy.

Mr de Villepin's reputation was damaged last month when the government was forced to retract a new employment law after mass protests.

Mr Sarkozy has been accused of xenophobia and discrimination over a tough new immigration bill, says the BBC's Emma Jane Kirby in Paris.

France's government, already reeling, is now plunged into the middle of a high political drama, our correspondent says.

The latest popularity poll, published in Liberation newspaper, shows Mr de Villepin has the second-lowest rating of any French prime minister in the past four decades.

'French Watergate'

At an earlier meeting of UMP deputies, Mr Sarkozy said he was determined to find out all he could about the scandal, "whatever the consequences".

But he also cautioned he was unwilling to "trigger a political crisis on the basis of newspaper articles or declarations from all and sundry".

An intelligence officer was asked to look into allegations that interior ministry officials had laundered kickbacks from the sale of frigates to Taiwan through a Luxembourg-based finance house, Clearstream.

Mr de Villepin is accused of having asked the officer two years ago to secretly investigate alleged dealings by Mr Sarkozy, which linked him to receiving kickbacks from the 1991 frigates sale.

The allegations proved false, but Mr Sarkozy demanded a judicial investigation, claiming Mr de Villepin specifically targeted him in the inquiry to try to scupper his chances of running for president next year.

The intelligence officer involved in the case, which some commentators are dubbing the French Watergate, has also reaffirmed Mr de Villepin's innocence in an interview with Le Figaro newspaper on Tuesday.