President Viktor Yushchenko of Ukraine reacted to a growing corruption row today by sacking Yulia Tymoshenko, the braided business tycoon who stood beside him during last year's Orange Revolution and was then appointed Prime Minister.

Mr Yushchenko's decision to sack Ms Tymoshenko and her Cabinet and to accept the resignation of Petro Poroshenko, his own close ally who heads the Security and Defence Council, left the Ukrainian President looking increasingly isolated.

Ms Tymoshenko's oratory brought tens of thousands onto the streets in last December's protests against a rigged presidential election. Both Mr Poroshenko and another aide suspended today have been accused of corruption.

The President appeared relaxed as he addressed journalists from Ukrainian television stations. "I knew that there were definite contradictions between those people," he said, "but I hoped that there would not be enough time for intrigues. Those were my hopes."

Mr Yushchenko made his abrupt move after Mr Poroshenko, a tycoon who was a major financial backer of the Orange Revolution, and another top presidential aide, were accused of corruption by some of their former allies. The President appeared to be trying to cut through a crisis that has already undermined his credibility.

Today, Mykola Tomenko, a Vice-Prime Minister, became the second top official to step down in a week, accusing Mr Poroshenko and others of corruption.

"I have realised that some people steal and others resign," said Mr Tomenko, who had been in charge of humanitarian affairs. "I don’t want to bear common responsibility for people who have created a corrupt system."

The President's chief-of-staff, Oleksandr Zinchenko, resigned on Saturday and also levelled damaging charges of corruption against Mr Poroshenko and other high-level officials.

Mr Yushchenko called the allegations "groundless but very strong" and said that they would be investigate. But he said both Mr Poroshenko and Ms Tymoshenko remained his "friends" and he hoped that they could remain part of his team.

"I have spent the last three nights thinking about how to keep together that which has already separated ... the key issue was the issue of trust," he said.

"If there had been a possibility to preserve team spirit, to remain together, it would have been the best answer. We had such an agreement and during the night it was changed, but not by me."

Jeremy Page, Moscow Correspondent of The Times, said from Ukraine that the divisions within the Orange Revolution allies had been apparent even before the alliance was formed and squabbles had broken out as soon as Mr Yushchenko took power and Ms Tymoshenko was awarded the Prime Minister's post over her rival, Mr Poroshenko.

He said that the main source of dispute since then had been over Mr Yushchenko's attempt to renationalise - and then reprivatise - state corporations sold off corruptly under the rule of Leonid Kuchma in the 1990s.

Page said that Mr Yushchenko had had little choice but to sack both Mr Poroshenko and Ms Tymoshenko, because to have got rid of just one would have left Ms Tymoshenko with too much power.

"The problem is that Tymoshenko already has her fortune, she has major political ambitions and she is very popular - so it's unlikely that she's going to be happy to step down from politics," he said. "If she now becomes part of the opposition that could give him a major headache in parliamentary elections next March."

Vitaliy Chepinoga, spokesman for Ms Tymoshenko, refused to comment. "Let the President speak his mind today, tomorrow we will comment," he said.

Mr Yushchenko appointed Yuriy Yekhanurov, a former economics minister who now heads a parliamentary committee on industrial issues, as acting prime minister.

Oleksandr Lytvynenko, a political analyst with the Razumkov think tank, said the government’s dismissal would hurt Mr Yushchenko. "Doubts had already emerged about his ability to make decisions, which are beginning to damage his image not only in Ukraine, but also abroad," he said.

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