He said Mr Chiou would be charged with embezzlement and taking advantage of his public position for personal benefits.

The spokesman said prosecutors uncovered evidence during a probe into the former first family's money-laundering scandals, including the dispensation of funds under a diplomatic account for a classified project codenamed 'the An Ya Project'. The Foreign Ministry declined to discuss any details of the secret mission.

Mr Huang said Mr Chiou, who was then secretary general of the council, allegedly asked the ministry to give him US$500,000 in the form of traveller's cheques for An Ya after its budget was exhausted. The ministry did, but instead of using the money on the project, Mr Huang said, Mr Chiou cashed the cheques in overseas casinos and took the money.

Mr Chiou denied the claims, Taiwanese media reported.

He served as vice-premier from last year until May, when he stepped down because of his role in another diplomatic scandal: two businessmen allegedly pocketed US$30 million that was intended to help Taiwan forge ties with Papua New Guinea.

That scandal, which came to light on May 2, triggered a political storm. Besides Mr Chiou, foreign minister James Huang Chih-fang and deputy defence minister Ko Cheng-heng were also forced to step down.

Mr Chiou is known as one of Mr Chen's right-hand men and a Democratic Progressive Party strategist. Since investigators began looking into Mr Chen's alleged corruption and embezzlement, Mr Chiou had also been questioned by prosecutors.

His detention came only days after another senior DPP member, Chiayi county magistrate Chen Ming-wen, was taken into custody on corruption charges.

Analysts said Mr Chiou's detention meant that more key members of Mr Chen's government would be brought down as investigators closed in on the former president and his family.

'I believe [we will see] more unexpected corruption cases uncovered soon because Chiou had played a key role in many secret deals of the Chen Shui-bian government,' said Chang Ling-chen, a political analyst at National Taiwan University.

'The detention of Chiou also suggests that prosecutors now have in their hands strong evidence on the [former] first family's corruption charges as this can be considered an important goal in this massive investigation.'

With nine people arrested so far on corruption charges linked to the former first family's graft scandals, another commentator, Nan Fang-shuo, said Mr Chiou's detention would further sully the images of the DPP and Mr Chen.

He said the detention could be a breakthrough in the investigation into Mr Chen's alleged wrongdoings.

'I think the detention of Chiou is good news for all Taiwanese people, as we have waited for a long while for such a breakthrough,' Mr Nan said. 'And many people hope the probe into the scandals will be over as soon as possible.'

Mr Chen described Mr Chiou's detention as a 'political revenge' by the Ma Ying-jeou government against him and his aides.

'The prosecutors want to detain all former senior officials of my government because they want to indict me as soon as possible,' he said. 'But they are doing all these under the guise of fighting against corruption, and they dare not come after me alone.'