Liliane Bettencourt, the main shareholder in cosmetics giant L'Oreal and France's richest woman, boosted Sarkozy's election campaign with hundreds of thousands of dollars in cash, Bettencourt's former bookkeeper said. Campaign donations of more than $10,000 are illegal in France.

While Sarkozy quickly denied all allegations, they have gradually turned into the biggest crisis of his presidency. On Wednesday, prosecutors opened an official probe into claims of illegal campaign funding.

Two junior ministers resigned Sunday following scandals involving the purchase of cigars with public money and the use of government jets to fly to business trips to the Caribbean. However, the Cabinet reshuffle didn't relieve pressure on the government.

Sarkozy's approval rating, already burdened by unpopular austerity plans, this week dropped to an all-time low. The 33 percent rating published by French pollster BVA Tuesday is 3 percentage points below the May result, rendering Sarkozy the most unpopular French president since BVA started the survey three decades ago.

Analysts say Sarkozy is under pressure to sack Labor Minister Eric Woerth, who is at the center of the allegations.

The bookkeeper, identified by the prosecution as Claire Thibout, told French news Web site Mediapart she was involved in withdrawing $200,000 in cash handed to Woerth in unmarked envelopes in 2007. Woerth at the time was Sarkozy's campaign treasurer.

Thibout told Mediapart the illegal donations took place for many years at Bettencourt's exclusive villa in a Paris suburb.

"Politicians were constantly marching through the house, especially at election time ... They all came to pick up their envelopes, sometimes as much as 100,000 euros, or even 200,000 euros," Mediapart quoted the bookkeeper as saying.

Woerth, who has fought hard against tax evasion, strongly denied the allegations and said he is suing for slander.

"I never, never received a single illegal euro," the minister said in a television interview. "Everything is false. It's defamation."

Sarkozy came to the aide of his long-time ally, complaining during a tour of a hospital this week that "society is more interested in people who create a scandal than a person who provides health care or creates jobs."

Analysts say the allegations will undermine Sarkozy's and Woerth's efforts to push through a highly unpopular pension reform and stringent 2011 budget cuts.

The pension reform, unveiled and championed by Woerth, caused hundreds of thousands of French to take the streets in protests last month. It aims to raise the minimum retirement age from 60 to 62 and reduce pension advantages for civil servants. The reform comes as France is under pressure to modernize its economy and consolidate its budget.

Sarkozy wants to bring the public deficit down from 8 percent of gross domestic product in 2010 to 6 percent by the end of next year and below the European Union's limit of 3 percent in 2013.

While they might prove to be untrue, the allegations have already clouded Sarkozy's bid for re-election in 2012.

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