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Prosecutors have launched an investigation into claims of illegal campaign funding for French President Nicolas Sarkozy.

The move follows allegations by a former accountant for France's richest woman, Liliane Bettencourt.

Claire Thibout reportedly told police she was involved in channelling 150,000 euros (£124,000) to Mr Sarkozy's presidential campaign in 2007.

Campaign treasurer Eric Woerth denies the claim and is suing for slander.

Mr Sarkozy has dismissed claims surrounding the case as a "smear".

Ms Thibout reportedly said the money was to be handed over to Mr Woerth, who is now both treasurer for Mr Sarkozy's UMP party and also France's labour minister.

Her allegations were reported by the French website Mediapart after she made a statement to police on Monday.

The limit for donations to political parties is set at 7,500 euros in France.

'Political plot'

Mr Sarkozy has been facing growing pressure over the affair, which is linked to a trial over the estimated 17bn euro fortune of Mrs Bettencourt, 87. The trial opened briefly last week before being adjourned.

Liliane Bettencourt is the daughter of Eugene Schueller, who founded cosmetics giant L'Oreal in 1909.

Mr Woerth is leading efforts to push through a major pension reform, and has rejected calls for his resignation.

In a television interview on Tuesday he dismissed what he called "a political plot orchestrated by the Socialist Party".

Earlier that day, opposition MPs had walked out of the French parliament after a minister accused them of extreme-right tactics for repeatedly asking about the allegations.

The comments were a reference to extreme-right newspapers that denounced the French political class in the 1930s.

Mr Woerth has also come under scrutiny because his wife worked for the company that managed Mrs Bettencourt's fortune, and their names emerged in tapes secretly recorded by Mrs Bettencourt's butler.

The tapes suggest that Mrs Bettencourt had been making cash donations to members of the UMP including Mr Woerth, and that she had been avoiding taxes.

Mrs Woerth recently resigned from her position, and the couple have denied any conflict of interests.

Withdrawal 'confirmed'

The recordings have been offered as evidence in the trial that opened last week.

In the trial, Mrs Bettencourt's daughter Francoise is suing celebrity photographer Francois-Marie Banier, a close friend of her mother's, for allegedly exploiting her mental fragility to gain access to her fortune.

In her allegations, Ms Thibout told Mediapart that she had been ordered to withdraw the 150,000 euros in March 2007 but only withdrew 50,000 euros, her authorised limit.

Police said on Wednesday they had confiscated records from the BNP Paribas Bank where Mrs Bettencourt's account is held and confirmed the withdrawal, Le Monde newspaper reported.

Ms Thibout has said another employee then went to Switzerland to collect the rest of the money.

She also claimed that Mr Sarkozy was one of a number of centre-right politicians who received regular envelopes of cash after dinners at a house where Mrs Bettencourt and her husband lived in Neuilly-sur-Seine, where Mr Sarkozy used to be mayor.

An aide to Mr Sarkozy dismissed the claim as "totally false".