Italian Minister for Economic Development, Claudio Scajola, said yesterday he was resigning over a corruption investigation into his purchase of a Rome apartment.

Mr Scajola denied any wrongdoing but said he needed to step down to concentrate on his defence.

"I must defend myself. And to defend myself I cannot continue to work as a minister as I have been doing for the past two years," he told journalists shortly after meeting Prime Minister Silvio Berlusconi.

Mr Scajola already offered to resign last week, but Mr Berlusconi urged him to stay on.

The allegations against Mr Scajola focus on a central Rome apartment with a view of the Colosseum that he bought in 2004 for a below-market price of €600,000. The case came to light during a separate investigation into government tenders for public works.

Investigators in that probe discovered that an architect apparently serving as an intermediary in the deal, Angelo Zampolini, deposited €900,000 in cash at a bank in Rome in exchange for 80 cheques made out to the former owner of the flat.

Prosecutors allege that money used to buy the flat could be traced back to Rome businessman Diego Anemone, who is implicated in several other corruption scandals.

Mr Scajola, 62, joined Berlusconi's Forza Italia party in 1995. In 2002 he was forced to resign after the extreme-left Red Brigades assassinated the judge Marco Biagi, shortly after Mr Scajola had taken away his police escort.