Villepin's career hangs by a thread as allies claim he lied

Dominique de Villepin has been dumped by important political and media allies, despite renewed denials of his involvement in an alleged plot to smear a colleague and rival.

The French Prime Minister's career appeared to hang by a thread last night after several of his nominal parliamentary supporters on the centre-right told President Jacques Chirac that he must go. Even the centre-right newspaper Le Figaro, normally M. Villepin's ally, suggested, in a convoluted editorial, that the Prime Minister seemed to have "lied several times" about his role in the affair.

Franz-Olivier Giesbert, a former editor of Le Figaro and one-time friend of M. Villepin, also publicly repeated an accusation that the Prime Minister had tried, in July 2004, to drum up media interest in allegations of corruption against his colleague and rival, Nicolas Sarkozy, the Interior Minister. By that time, M. Villepin had already been told the allegations were a hoax.

M. Villepin again rejected all suggestion of wrong-doing yesterday. In his monthly press conference - utterly dominated by an avalanche of questions on the so-called Clearstream Affair - he adopted a high moral tone. He spoke of his clear conception of "my own responsibilities" and "the idea that I have of service to France". He accused journalists of abandoning their "scruples" and their own "ethical code" to make "insinuations" against him.

For the time being, President Chirac, whose own alleged role in the "smear" scandal is under investigation, appears determined to hold on to M. Villepin, his long-term protégé. A number of presidential advisers and senior members of the President's party, the Union pour un Mouvement Populaire (UMP), are said to have told M. Chirac that government will be paralysed so long as M. Villepin remains in office.

The affair turns on a poison-pen letter, and a CD-rom, sent to a judge in 2004 accusing M. Sarkozy, and other business and political figures, of holding undeclared off-shore, bank accounts through a small Luxembourg clearing bank, Clearstream International. M. Sarkozy was at the time beginning to challenge M. Chirac for domination of the French centre-right. The accusations later turned out to have been fabricated, using real bank account numbers and trumped-up names.

It emerged last month that M. Villepin, as Foreign Minister, had asked General Philippe Rondot, a senior intelligence officer, to investigate the bank accounts in January 2004 - three months before the anonymous letter was sent to the judge. In statements to parliament, and to the media, in recent days M. Villepin said that this unofficial investigation was aimed at a possible mafia or terrorist "plot" against the French state. He categorically denied suggestions that he had asked for an investigation of M. Sarkozy or any other politician.

On Wednesday, the newspaper Le Monde published extracts from the sworn - and supposedly confidential - testimony of the retired intelligence officer, which contradicts M. Villepin on several important points.

M. Rondot says that at the meeting in M. Villepin's office in the Foreign Ministry in January 2004, he was ordered to investigate politicians' links with Clearstream. He says that M. Sarkozy's name was repeatedly mentioned at the meeting. He says a list of Clearstream accounts produced at the meeting - the same one later sent to a judge and proved to be bogus - did contain M. Sarkozy's name.