Cerdán has been asked to testify in court after a judge suggested he may have acted with former party officials in improperly awarding public contracts in exchange for kickbacks.

He said on Thursday he was stepping down to defend himself in the Supreme Court on 25 June, maintaining he had "never committed a crime nor have I been complicit one".

Despite his seven years in power, Sánchez heads a shaky, minority coalition, secured after the conservative Popular Party won 2023 elections but failed to form a government.

Amid mounting speculation over his own future, he called a news conference in a bid to head off the creeping scandal.

In a statement followed by media questions, he said he knew absolutely nothing about the corruption affair and instead pledged to restructure the leadership of his Socialist PSOE party.

"This is not about me, and it's not about the Socialist party," he said.

His government would continue its "political project", insisting that no new elections would take place until 2027.

However, Sánchez may face pressure from within his coalition, after deputy prime minister Yolanda Díaz from left-wing coalition partner Sumar said she also wanted explanations.

The opposition Popular Party has been buoyed by a weekend rally in the centre of Madrid that attracted tens of thousands of supporters, calling for Sánchez to go under a slogan "mafia or democracy".

Party leader Alberto Núñez Feijóo appealed to other coalition parties to abandon the prime minister. There was no possible firewall, he told reporters on Thursday: "Corruption is already the hallmark of this government and it must end."

Little over an hour earlier, Sánchez had made his first appearance answering media questions since a national power outage that hit Spain in April.

Speaking from Socialist party (PSOE) national headquarters in Madrid, the prime minister said he had until Thursday morning been persuaded of Santos Cerdán's integrity and wanted to apologise to Spanish citizens.

"There is no such thing as zero corruption, but there must be zero tolerance when it takes place," said Sánchez, the secretary-general of the PSOE. "We shouldn't have trusted him."

Sanchez accuses the opposition of conducting a smear campaign. Like many others he said he had his faults and asked the Spanish people for forgiveness.

He went on to accuse the conservatives of besieging his government on a multitude of issues and followed up his appearance with a message on social media, vowing to continue working for what he had always stood for: "clean politics and democratic renewal."

Sánchez has faced repeated political crises and in April 2024 threatened to stand down.

He took five days to decide on his future, when a court decided to open preliminary proceedings against his wife over allegations surrounding her business dealings.

Then too he called a televised news conference, and in a moment of high drama announced he had decided to stay on in the job.

However, the Cerdán resignation represents a moment of political jeopardy for the prime minister.

Even though he is not personally implicated in the corruption allegations, one of his closest political allies is, along with two other officials.

Supreme Court Judge Leopoldo Puente acted after a lengthy report from Spain's Civil Guard Central Operative Unit concluded that Socialist party organiser Cerdán would have had full knowledge of payments made in the alleged kickbacks scandal.

The judge said the report revealed that evidence suggested Cerdán had acted in collusion with a former Sánchez-era transport minister, José Luis Ábalos, and the minister's ex-adviser Koldo García.

Ábalos lost his job in a reshuffle 2021 and was then forced to resign from the Socialist party as well in 2024. He remains an independent MP.

The police report is based on a number of recordings made by Koldo García over a four-year period and it estimates that the payments were worth €620,000 (£530,000).

Transcripts of some of the recordings appeared in Spanish media on Thursday alleging that Cerdán and Koldo García had discussed payments of substantial sums of money.

Koldo García and José Luis Ábalos have also been called to testify by the judge. The former minister denies he has done anything wrong.