The issue blew up again after the publication of friendly mobile text messages he purportedly sent to the disgraced treasurer at the heart of the affair.
The leader of Spain's main opposition Socialist Party, Alfredo Perez Rubalcaba, said he was severing all contact with the prime minister and his party yesterday.
"Given the unsustainable political situation in Spain, the Socialist Party calls for the immediate resignation of Mariano Rajoy as head of the government," he told reporters in Madrid.
"Mr Rajoy's conduct in this situation can be summarised quite simply: silence, lies, and after what we have learned today, collusion, extremely serious collusion," Rubalcaba said.
The centre-right daily El Mundo newspaper published images of the alleged text messages between Rajoy and Luis Barcenas, the former ruling party treasurer who is in pre-trial detention as part of a separate corruption inquiry.
Barcenas is suspected of running a party slush fund financed by corporate donors who were then rewarded with state contracts. The cash was allegedly used to supplement senior party members' salaries.
According to El Mundo, the prime minister sent supportive messages to Barcenas between May 2011 and March 2013, ending some two months after the scandal erupted.
"Luis, I understand, be strong. I will call you tomorrow. Best wishes," said one of the messages purportedly from Rajoy to Barcenas, dated January 18 this year when El Mundo first published allegations over the slush fund.
"It is not good to try to determine what we will say or to comment on things that must be presented to the courts, which we must all respect," read another message allegedly sent by Rajoy.
The Popular Party, which has ruled with an absolute majority since winning an election landslide in September 2011, hit back at the opposition call for the prime minister to step down.
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