Mr Hartz is a close ally of German Chancellor Gerhard Schroeder

The executive committee of VW's supervisory board has recommended that the firm accept Mr Hartz's resignation.

VW's personnel chief offered to step down on Friday, amid claims that union leaders at the carmaker were bribed with holidays and prostitutes.

A close adviser to Gerhard Schroeder, Mr Hartz has denied any wrongdoing.

Mr Hartz has been closely associated with Chancellor Schroeder's efforts to reform the German economy.

Critics say the scandal is focusing attention on corporate Germany's system of works councils, in which union leaders and company officials make decisions together. Some argue that the system is a breeding ground for corruption.

Economic reforms

"We will recommend to Volkswagen's supervisory board that the offer of resignation from Peter Hartz be accepted," said Christian Wulff, the governor of Lower Saxony state, which is VW's biggest shareholder.

Mr Wulff said the appointment of a successor to Mr Hartz could take weeks.

VW chief executive Bernd Pischetsrieder is expected to take on the role until then.

If the supervisory board accepts the committee's recommendation, Mr Hartz will be the third VW executive to leave the firm in the wake of the scandal.

Klaus Schuster, a former director of VW's Skoda unit, and Klaus Volkert, VW's top worker representative, have already stepped down.