By Caroline Gluck BBC News, Taipei

Ma Ying-jeou is a likely presidential candidate for 2008

The mayor of Taipei, Ma Ying-jeou, has admitted that an aide mishandled his official expenses.

Mr Ma, who is also head of the main opposition party, apologised for the incident but rejected calls to resign.

His apology came a day after prosecutors quizzed him for more than four hours over accusations that he misused a special expense account.

Mr Ma told a news conference his office had discovered that an accountant had submitted fraudulent receipts.

Instead of filing separate claims for several thousand small items, the accountant instead submitted fewer invoices for larger amounts - though the total claim was less than the mayor was entitled to and the official had kept the original receipts.

Mr Ma said there had been serious administrative flaws and felt ashamed by the incident. But he also said he was not involved in the case and saw no reason to leave office.

It was an embarrassing admission by Mr Ma, a former minister of justice with a squeaky-clean image. He is a likely presidential candidate for his Kuomintang (KMT) party.

His office began its own investigations after High Court prosecutors started to examine a case brought by members of the governing Democratic Progressive Party, who claimed that the Taipei mayor had misappropriated half of his allowance by depositing the funds into his personal account.

The mayor has denied any wrongdoing and said he followed the same procedures as thousands of other public officials.

He has accused the governing party of trying to focus attention away from a corruption scandal surrounding President Chen Shui-bien.