Faneuil's past came under scrutiny as the defence attacked

Giving evidence for a third day, Douglas Faneuil said he had changed his story and cooperated with the law.

Ms Stewart is accused of lying to investigators about illegal tip-offs.

Her lawyers are trying to shake his testimony by questioning his lifestyle. On Wednesday he admitting taking drugs such as cocaine and Ecstacy.

Phone calls

Mr Faneuil, a 28-year-old former assistant at Merrill Lynch, has testified that he called Ms Stewart to tell her that the founder of ImClone, Mr Sam Waksal, and his family were dumping their shares.

On hearing the news, Ms Stewart is supposed to have answered: "I want to sell all my shares".

Stewart has denied lying

Mr Faneuil alleged on Tuesday that his boss and Ms Stewart's broker Peter Bacanovic told him to make the call.

The young assistant also testified on Thursday that Mr Bacanovic - without explicitly asking him to lie - repeatedly pressured him to back up his and Stewart's assertion.

"I felt I would be fired if I didn't lie," he said.

But Mr Bacanovic's lawyer argued that the two men had a joking relationship at work for months after the stock sale.

However, the judge refused to allow e-mails between them admitted as evidence.

Long sentences

Mr Bacanovic also is charged in connection with the case, which centres on the sale of almost 4,000 shares in December 2001.

Both he and Ms Stewart have been charged with obstruction of justice and making false statements over the sale.

Martha Stewart, 62, is a household name in the United States, who offered homespun advice on lifestyle through her books, magazines and multimedia offerings.