Ehud Olmert, Israel’s prime minister, on Friday faced renewed pressure to resign over a police investigation into his financial past, but insisted he would step down only if confronted with a formal indictment.

Late on Thursday Mr Olmert admitted receiving funds from a US-Jewish businessman while serving as mayor of Jerusalem and minister for trade. But he stressed that the money was used to finance his campaigns, and not for personal enrichment.

“I never took bribes. I never took a penny for myself,” he said.

The prime minister’s comments ended a week of fevered speculation set off by news that he had been questioned by Israeli police last week.

A court-imposed gagging order was finally lifted on Thursday evening, allowing prosecutors to reveal their suspicions and the prime minister to begin to build his public defence.

The accusations cast a shadow over this week’s celebrations marking the 60th anniversary of the founding of Israel.

With Mr Olmert preparing to welcome a cast of high-profile visitors, including US President George W. Bush, next week, the probe comes at an embarrassing time.

The case centres on a New York-based Jewish fundraiser called Morris Talansky, who prosecutors believe gave money to Mr Olmert.

According to an official police statement, “the investigation deals with suspicions that the prime minister received sums of money unlawfully during the period when he was holding a public position before he became prime minister”.

The police suspect Mr Olmert received “significant” amounts of money, but revealed neither a precise figure nor details on how the funds were used.

Mr Olmert said he received funds from Mr Talansky when campaigning for the post of mayor of Jerusalem in 1993 and 1998, and when he fought for the leadership of the Likud party in 1999 and again in 2002.