German President resigns in corruption scandal

German President Christian Wulff, is embroiled in a scandal over a home loan that he accepted when he was prime minister of Lower Saxony.

"The developments of the past few days and weeks have shown that (the German people's) trust and thus my effectiveness have been seriously damaged," Wulff said in a brief statement.

"For this reason it is no longer possible for me to exercise the office of president at home and abroad as required."

Yesterday, state prosecutors asked parliament to remove his legal immunity over accusations that he accepted favours.

German Chancellor, Angela Merkel cancelled a visit to Italy to deal with the political crisis, and she is expected to give a statement shortly.

German media say the crisis is unprecedented in post-war Germany.

The scandal comes at a time when Europe's economic powerhouse does not need any new distractions, as Germany wrestles with the eurozone debt crisis.

In 2010, Merkel had struggled to get Wulff, an ally in her centre-right Christian Democrat party (CDU), appointed as president. He was the country's youngest president at 51.

He will be replaced as president by Horst Seehofer of the Christian Social Union (CSU), the Bavarian sister party of the CDU.