In the hope of averting a political crisis, Hungary's new prime minister, the Socialist Peter Medgyessy, has admitted being a counter-intelligence agent for the country's communist regime more than 20 years ago.

I helped in preventing foreign intelligence services from obtaining Hungarian secrets

Peter Medgyessy

His revelation in parliament followed a front page report in an opposition daily which said he served the spycatching agency as a senior officer.

Mr Medgyessy, who took office last month, said that his counter-espionage activities had been aimed at helping Hungary join the IMF, in the teeth of opposition from Moscow.

"I helped prevent foreign spies from obtaining state secrets and to ensure they should not be able to block our joining the IMF," Mr Medgyessy told the parliament.

He said he had not done any counter-intelligence work that was not related to his job at the Finance Ministry from 1977 and 1982.

Hungary's initial efforts to join the IMF in the early 1970s were scuppered by Moscow, but a new attempt was made during the period in question.

Legal action

Earlier this week the Magyar Nemzet newspaper published a photocopy of what it said was a contract drawn up in March 1978, in which Mr Medgyessy was promoted to the rank of first lieutenant.

According to Hungarian radio, the prime minister says the document is a forgery, and is preparing to sue.

Correspondents say the allegations leave Mr Medgyessy's future as head of the government hanging in the balance at a crucial time for the country, which is entering the final round of negotiations for entry into the European Union.

The Socialists, who hold 178 seats in the Hungarian parliament, have rallied behind their leader, but their junior coalition partners, the Alliance of Free Democrats, have said they would accept Mr Medgyessy's resignation if it were offered.

Some press reports have even suggested that the Free Democrats - who have just 20 seats - are hoping to arrange a vote of no confidence to force him to resign.

'No informant'

Mr Medgyessy was keen to stress that his role was not one of a spy.

"A spy-catcher is not an agent, not an informant. Counter-intelligence and intelligence are ancient professions and serve the protection of the country."

Soviet troops occupied Hungary in 1945, and just over 10 years later brutally suppressed a major anti-communist uprising. They left in 1991, shortly after the country held its first free elections.

Mr Medgyessy's government is the fourth since the collapse of communism.

His Socialist-led coalition entered government after last month's legislative elections, ousting a right-wing coalition from power.