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Mr McCann's sister, Philomena McCann, said the possibility that police might seize the toy was a "disgrace".

"It would be extremely distressing for Kate because she has seen it as a symbol of her daughter since she went missing," she added.

Family spokesman David Hughes could not confirm the report, but said he believed Cuddle Cat had already undergone forensic testing.

Meanwhile, the McCanns announced today that they would not use money raised for the fund to find Madeleine to pay for their legal defence.

They are facing the prospect of being charged over their daughter's disappearance after police named them as "arguidos", or formal suspects, during questioning on Friday.

In response the couple have appointed top lawyers in Portugal and Britain, including Michael Caplan QC, who acted for former Chilean dictator General Augusto Pinochet.

Donations totalling £1,036,104.17 have so far been received for Madeleine's Fund: Leaving No Stone Unturned, according to the official campaign website.

The fund - which for legal reasons is not a charity - has four objectives, one of which is to "provide support, including financial assistance, to Madeleine's family".

There was controversy about whether or not Mr and Mrs McCann would use money from the fund to pay their legal costs after it became clear they were under suspicion.

Mr Hughes said today: "Gerry and Kate's view is that if they take money from the fund it might be that 90% of people who made donations aren't bothered about it.

"But if 10% of people are bothered about it, they don't want to upset them.

"They want to take the controversy out of the situation."

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