Taiwanese prosecutors say they have enough evidence to charge President Chen Shui-bian with corruption - but he is protected by presidential immunity.
President Chen and his wife have denied any wrongdoing
They have filed corruption charges against first lady Wu Shu-chen and three former presidential aides over the alleged misuse of state funds.
Taiwan's opposition immediately called for the president's resignation.
President Chen has been undermined by a series of scandals involving his family and his office in recent months.
He has already survived two opposition attempts, including one last month, to remove him from office.
The ruling Democratic Progressive Party said it was meeting on Friday evening to discuss the latest developments.
The charges relate to the handling of a secret presidential fund used for diplomatic work overseas. Officials say around US$500,000 could not be properly accounted for.
During the four-month investigation, officials looked at six separate cases involving the use of the fund. They said the president's explanation for two were verified, but three were questionable and one was described as pure fiction.
March 2004: President Chen narrowly wins re-election
May 2006: President's son-in-law held over insider trading claims. Charged in July
Allegations of improper conduct involving Chen's wife and senior aides also surface
June: Chen cedes some powers to PM amid outcry
Unprecedented opposition motion to oust him, which fails
September: Two weeks of pro and anti-Chen marches
Opposition launch new bid to recall Chen. Again fails
October: Wu Shu-chen cleared of accepting shop vouchers in return for influence
November: Wu Shu-chen charged with corruption over handling of secret presidential funds
Prosecutors say enough evidence to indict Chen, but he is protected by presidential immunity
The Public Prosecutor's Office of the Taiwan High Court announced on Friday it was filing charges of embezzlement and forgery of documents against Wu Shu-chen.
"Prosecutors found that Wu and three other suspects jointly claimed 14.8m Taiwan dollars (US$448,484) with false receipts... between July 2002 and March 2006," Chang Wen-cheng, of the prosecutor's office, said.
The first lady has previously denied any wrongdoing.
"Evidence also showed Chen is suspected of graft and forgery... but since he is protected by constitution against criminal charges, he can only be prosecuted after he leaves office," Mr Chang said.
Ma Ying-jeou, of the opposition Nationalist Party, said Mr Chen must resign as soon as possible.
"He has lost the people's trust and respect, and as he is burdened with scandals, he can no longer lead the people nor effectively represent the country," he said.
There was no immediate comment from the presidential office.
President Chen has been facing growing calls for his resignation in recent months over the scandals to hit his family and office.
Last month, Wu Shu-chen was cleared of accepting vouchers from a department store in return for her influence.
In May, her son-in-law, Chao Chien-ming, was arrested and later charged with insider trading.
Mr Chen, whose term of office is due to run until 2008, has apologised for the scandals and did cede some powers to Prime Minister Su Tseng-chang in June to placate his critics, but has refused to resign.
The scandals have brought tens of thousands of people - both supporters and opponents of the president - out on to the streets to voice their views.