Lithuanian President Rolandas Paksas violated the constitution when he gave citizenship to a Russian businessman, the country's highest court has ruled.
Rolandas Paksas denies wrongdoing
Experts say the ruling makes it more likely the president will be impeached.
The impeachment process began earlier this year after a leaked secret service report said he had links to organised crime and Russian security services.
Mr Paksas granted citizenship in April to Yuri Borisov, the main backer of his successful January election campaign.
"The Lithuanian Constitutional Court decided that a decree by
Rolandas Paksas, issued on 11 April and granting citizenship to Yuri Borisov contradicted articles 29, 82 and 84 of the Constitution," Egidijus Kuris, the head of the court said on live television.
In its ruling, the court said Mr Paksas had given Mr Borisov privileged treatment, breaching the article of the constitution declaring all people equal under the law.
Political and church leaders, including Prime Minister Algirdas Brazauskas, have added their voices to those of demonstrators calling for Mr Paksas' resignation.
But before the court ruling the president said that his determination not to quit would not be influenced by a judgement against him.
He has repeatedly denied any wrongdoing.
"I think [the ruling] will have a huge effect on this process and of course not in favour of the president," Raimundas Lopata, the head
of the Vilnius Institute for International relations and Political Sciences told the AFP news agency.
On Monday a parliamentary panel met to prepare the ground for the next moves in the impeachment process.
Yuri Borisov: Blackmail allegations are being investigated
The impeachment document says Mr Paksas posed a threat to national security, leaked state secrets, obstructed the work of state institutions and let top aides abuse their office.
Lithuanian public prosecutors have opened a pre-trial investigation into Mr Borisov, on suspicion of illegally trading in helicopter spare parts.
They have also opened a preliminary investigation into allegations that he blackmailed the president, and demanded a position in his office.
Lithuania is due to join the European Union on 1 May 2004.