The Hefer commission was set up by President Mbeki

The City Press newspaper said there was no credible substance to support the allegation against director of public prosecutions, Bulelani Ngcuka.

An editorial admitted their information "was devoid of truth, contrived and misleading" and apologised for harming his dignity and reputation.

The whole affair has attracted intense media interest in South Africa.

It has also exposed deep divisions within the ruling African National Congress - as some leading members were being investigated by Mr Ngcuka's office for corruption.

The BBC's Franz Kruger in Johannesburg says the newspaper's action is another nail in the coffin for the claims against him.

BULELANI NGCUKA Unknown in 1994 Pledged to fight corruption Secured conviction of Winnie Mandela Accused of spying for apartheid Full profile

He says the inquiry into the allegations is still hearing testimony but is expected to clear the prosecutions chief.

The newspaper has also distanced itself from its former editor, who at the commission last week conceded that the report had been reckless.

One of the main lawyers at the inquiry is now recommending charges of perjury against the former editor of the newspaper which first reported the accusations.

Earlier in the inquiry, former Transport Minister Mac Maharaj said Mr Ngcuka was probably an agent for the apartheid government.

Mr Ngcuka has spearheaded the fight against corruption, led by the elite Scorpions unit.

Among others, stalwarts from the ruling African National Congress, such as Winnie Madikizela-Mandela and former chief whip Tony Yengeni have been convicted.

After investigating Deputy President Jacob Zuma, Mr Ngcuka said that there was a case against him in connection with a multi-million dollar arms deal but not enough evidence to take him to court.