Nicolas Sarkozy has vigorously denied any wrongdoing after reports emerged claiming that he received a substantial discount on a luxury flat he bought ten years ago – a charge that could damage his much-heralded bid for the French presidency.

French newspaper Le Canard Enchaine, alleged that Mr Sarkozy - the frontrunner in the battle to succeed Jacques Chirac – and his wife had paid “at least” €300,000 (£200,000) less than the market rate for a 6-bedroom duplex apartment in the chic Paris suburb of Neuilly.

The newspaper, a satirical weekly known for its investigations, made the allegations as part of what it is said was an examination into the assets and property of candidates vying for the presidency. It added that in next week’s publication, there would be further news on the investigation – a statement understood to denote a focus on Socialist candidate Segolene Royal.

The report claimed that the Sarkozys had in 1997 paid about €876,000 (nearly £600,000) for the apartment - between 12 and 35 per cent below the market rate on other properties bought in the same building during the same period. It also alleged that the Sarkozys benefited from free renovations on the flat, courtesy of the building’s property developer.

Mr Sarkozy, who is still mayor of Neuilly, but is to resign as Interior Minister in late March - about one month before the first round of France’s elections - sold the apartment late last year for €1.94m – more than double the original price, the report said.

Responding to the claims, Mr Sarkozy denounced the accusations as “extreme, ridiculous and opportunistic,” saying it was part of a campaign of dirty tricks designed to thwart his political ambitions.

“Why do we have this illness, which is so French, to sully people just because they are a candidate in the presidential election?” he said, addressing reporters while on a trip to Spain.

In a subsequent statement, he added that he called in local tax officers at the time of the purchase to confirm he was paying the right rate for the apartment, which overlooks the Seine river, noting also that some flats in the same building had indeed sold for less.

He insisted he himself had paid for the cost of remodelling the apartment. “I can’t help but deplore that as the French must choose between projects for their future, erroneous elements are being published in an attempt to discredit a candidate,” his statement added.

Although most opinion polls have given the conservative Mr Sarkozy, the governing UMP party’s candidate, a narrow edge over his Socialist rival Segolene Royal in the presidential race, his lead has dwindled over the past week and analysts say the sleaze allegations could dent his hopes of victory.

Ms Royal has herself recently been in the spotlight over her property and tax declarations, and was forced to confirm last month that she and her partner, Socialist Party leader Francois Hollande, paid the nation’s annual wealth tax – which applies to all assets over £500,000 – as they owned three properties.

One of these, a villa near Cannes, was said in media reports to be undervalued in the couple’s tax declaration, with its worth apparently being declared at around €300,000 (£200,000) when similar properties in the area were said to be worth much more. Le Canard is expected to publish its findings on the claims next week as part of its promise to divulge further details on its investigation.

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