Rajoy moved to calm the controversy, which prompted angry demonstrations on Friday outside the offices of his conservative Popular Party (PP) and threatened to destabilise him as he grapples with an economic crisis.

“Today unfortunately our party is subject to controversy. I want to tell you all to be calm. The Popular Party has always acted with transparency and rigour when it has been called into question,” he told a party gathering in Almeria.

“If I ever hear of irregularities or improper conduct concerning members of our party, I will not flinch,” said Rajoy, who won power from the Socialists in a massive election victory in November 2011.

The centre-right newspaper El Mundo reported Friday that senior members of the party, which Rajoy has led since 2004, had received undeclared salaries, mainly from private companies, over a 20-year period.

Citing unnamed former members of the PP leadership, the newspaper said the party’s former treasurer Luis Barcenas distributed envelopes containing thousands of euros to party officials on top of their official salaries.

El Mundo cited party sources saying that Rajoy never received such payments but that he ordered an end to the practice in 2009. That year Barcenas was implicated in another major corruption scandal and resigned as party treasurer.

Rajoy warned the party on Saturday its conduct must be “exemplary” and “honourable”, especially when Spaniards are suffering in a recession, with the government’s spending cuts and other austere reforms sharpening the pain.

“We must be more exemplary in our conduct, if that is possible, because that is what people quite rightly expect,” he said on Saturday in the televised gathering in the southern city.

“Many Spaniards are having a very hard time and we can only demand efforts and sacrifices of them if our compatriots can see that our behaviour is beyond all suspicion. We must be honourable.”