France’s labour minister Eric Woerth has stepped down as treasurer of the ruling UMP party after allegations of illegal donations by France’s richest woman.

Mr Woerth had been accused of accepting over £125,000 from L’Oreal heiress Liliane Bettencourt when he was chief fundraiser for Nicolas Sarkozy’s 2007 presidential election campaign.

He told reporters of the move after a cabinet meeting at which he launched a key pensions reform bill.

Mr Sarkozy had gone on national television to deny claims of corruption and back Mr Woerth, declaring “France is not a corrupt country”.

“The political class, left and right alike, is in general honest. French public officials are people of great rigour,” the president said in the prime time interview.

The president had insisted that Mr Woerth would still lead the pensions reform which he hopes will be passed by the end of October.

Mr Sarkozy, whose poll ratings have slipped to their lowest point in his three years in office, has described the party financing allegations as a “campaign” against him while he is fighting a difficult battle on raising the pension age.

Speaking to France 2 television in the garden of the presidential Elysee Palace, he steered the questions away from the scandal toward his efforts to modernise the country.

He cast himself as a tireless leader willing to put his reputation on the line to save France from untenable expectations about government social protections.

“When you carry out reforms … you bother a certain number of people.

“And the response is often slander.”

Mr Sarkozy is trying to win back voter support amid worries about the scandal that has destabilised the government, especially Mr Woerth.

Politicians on the left and right had urged Mr Sarkozy to respond publicly to allegations by a former accountant to L’Oreal heiress Ms Bettencourt that she gave £125,000 in cash to party treasurer Mr Woerth during the 2007 presidential campaign.