"We certainly could have debated the budget at a better moment," Finnish conservative MEP Piia-Noora Kauppi told the plenary in Brussels, urging the parliament to investigate if the city of Strasbourg has been unlawfully pocketing EU rent money.

"If this would be the case, the European parliament must take the city of Strasbourg to court," she said, adding that the parliament budget check-up for the year 2004 should be postponed until the investigation has finished.

The parliament threatened to bring in fraud investigators after it emerged that up to 25 percent, or 2.7 million euro, of the annual rent from Brussels to the landlords of the Winston Churchill and the Salvador de Madriaga buildings may have gone into the coffers of the Alsatian capital without their knowledge.

The buildings, hosting MEPs for a monthly plenary session, are owned by a Dutch pension fund which lets them to the city, which in turn sublets them to the parliament.

Strasbourg, however, appears to have been kept a substantial share of the rent before remitting the balance to the owners.

\"Who in the parliament knew?\"

German conservative MEP Markus Feber, responsible for a report signing off parliament spending in 2004, asked for full transparency from both the French city and the parliament's own administration.

"Who in the parliament knew about his?" he asked, echoing suspicions by other MEPs that the rent mischief must have been known within the parliament's own corridors.

"Why didn't the parliament's own internal procedures expose the appalling manner in which the tenancy agreements had been handled?" British eurosceptic MEP Jeffrey Titford asked.

The parliament's budgetary control committee has decided that the purchase of the two buildings, or further rent money, is to be put on hold, and has also decided not to sign off its annual accounts until the Strasbourg fiasco has been resolved.

Strasbourg fights back

Meanwhile, the mayor of Strasbourg, who according to MEPs has failed to come up with justifiable reasons for the city's rent-collecting, rejected all accusations of irregularities and fraud.

Mayor Fabienne Keller said the city would take legal action against the worse "slanderers," notably German tabloid Bild Zeitung, which reported that the city had over-evaluated the buildings by some €200 million and Austrian non-attached MEP Hans-Peter Martin for declaring that the matter "smells of corruption."

"Dealing with such scandalous accusations, we will press charges against the concerned media and against the author of these remarks", mayor Keller said, reiterating in a press release that the city had charged the European Parliament according to "market prices".

Ms Keller's announcement was received with scepticism in Brussels.

"The press release from Strasbourg was absolutely pathetic. The city must come up with better information or change its whole communication department", Finnish conservative MEP Alexander Stubb said.

The allegations of inflated rent sums has triggered an internal probe into parliament accountants and is set to re-ignite the debate on whether to scrap the seat in Strasbourg.

The Strasbourg location costs the EU €200 million a year in travel fees and causes logistics-related strife for MEPs and their assistants.