The future of Dominique de Villepin, the Prime Minister, hung in the balance today as French political life remained at a standstill amid suspicions that he used a smear campaign to damage Nicolas Sarkozy, the Interior Minister and his chief rival.

While M Sarkozy was giving testimony as a "victim" to investigating judges, the Elysée Palace insisted that President Chirac was standing by his appointed Prime Minister.

However anger was rising among parliamentarians in M Chirac’s Union for a Popular Movement (UMP), some of whom want the Prime Minister replaced by M Sarkozy, who is the party leader as well as the President’s long-standing adversary.

A majority of M Sarkozy’s allies in a Government now riven by civil war were said to be discouraging him from accepting the Prime Minister’s post, if offered, because it could destroy his chances of winning the presidency with a manifesto for reform next May. This would leave M Chirac with few choices for replacing his loyal, but discredited, protégé.

As M de Villepin tried to follow a normal routine - which will include talks with Tony Blair in London tomorrow tonight - M Sarkozy spent two hours relating his version of the so-called Clearstream affair to judges. "I was received by the magistrates as a victim," M Sarkozy said. "I told them I wanted the truth and that I had confidence in them."

The scandal, which is at the heart of M de Villepin’s troubles, involves bogus papers implicating M Sarkozy and other politicians in bribe-taking over a defence contract. The judges are trying to find the author of the fabrication.

The Prime Minister was forced to acknowledge last week that he had ordered a secret investigation by an intelligence general into the papers while he was Foreign Minister in January 2004 -- several months before the affair became public.

He has failed to convince many in his own party with denials last week that he ordered General Philippe Rondot to focus on M Sarkozy’s supposed involvement.

M Sarkozy’s closest allies are now waging open warfare on a Prime Minister whose authority, they say, has been demolished by his handling of the spring revolt against his youth employment law and then the Clearstream affair.

"Either the Prime Minister can produce irrefutable proof that the whole affair was a fabrication and that he had no hand in it, or the President must draw the consequences and change Prime Minister," said Francois Fillon, a party heavyweight who served as Minister for Education and Employment until last May. "One cannot run a Government with this kind of doubt weighing on one."

Harsh words also came from Francois Bayrou, leader of the centre-right UDF party, which has a member in the Cabinet but is critical of the Chirac administration."There is no Government any more. It is becoming bogged down more every day," said M Bayrou.

The opposition Socialist Party, which is reaping handsome benefit from the Government’s disorder, decided today to table a no-confidence motion.

Since the UMP has a strong absolute majority, this would be unlikely to pass, but it would expose divisions within the ruling party.

Jean-Marc Ayrault, the Socialists’ house leader said that the Government had led the state into deep crisis. "The leaders of the right are spending their energy not on the business of France but on settling accounts and staging dirty tricks against one-another," he said.

UMP parliamentarians were angered today when M de Villepin, who has never held elected office, failed to address the scandal at a weekly MPs' meeting. Some said that M Chirac should cut his losses and replace M de Villepin in order to try to rescue the UMP ahead of next year’s elections.

"Either the President decides to dismiss the Prime Minister or the Prime Minister draws his conclusions and decides to resign," said Jean-Paul Anciaux, a back-bencher. "It is impossible that nothing happens".

Others, however, said that they could see no alternative to M de Villepin attempting to ride out the storm. Political commentators mainly predicted that M Chirac would do everything to keep M de Villepin in office, but there was disagreement on whether events would soon force him to unload the deeply unpopular Prime Minister.

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