French former PM Dominique de Villepin has been placed under formal investigation over allegations he tried to smear President Nicolas Sarkozy.

Formal investigation is a first step to criminal charges. He denies wrongdoing.

One of Mr de Villepin’s lawyers made the announcement after the former PM had gone to meet two magistrates.

He is accused of encouraging the leaking of Mr Sarkozy’s name after it was included in 2004 on a false list of people who took bribes for arms sales.

He is being investigated for alleged "complicity in slanderous denunciations", his lawyer Luc Brossolet said.

Earlier this month, two investigating magistrates searched Mr de Villepin’s private apartment and offices.

This is not the first time Mr de Villepin has had to answer questions from judges over the so-called "Clearstream affair".

He was interviewed on the same subject for 14 hours in December, while his house and offices were searched by investigators three weeks ago.

After Friday’s questioning by magistrates, Mr de Villepin again insisted he had "never been involved in any political scheming", the French news agency AFP reported. "At no point did I request any investigation into politicians," he said.

Judges are looking for evidence that he directed a smear campaign against Mr. Sarkozy, who was then serving as interior minister, to try to spoil his chances of becoming president.

Mr Sarkozy was wrongly accused of having secret bank accounts in the Luxembourg clearing house, Clearstream, for bribes collected from the sale of French frigates to Taiwan in 1991.

Judicial sources say Mr de Villepin could be formally investigated for breach of trust, forgery and making false accusations, but the former prime minister denies any involvement in the affair.

Investigators have also indicated they would like to interview the former French President, Jacques Chirac, about the case.

But Mr Chirac has denied all knowledge of the incident, and claims he has permanent immunity for all his actions while in office.