Prosecutors in Taiwan said Friday they have enough evidence to indict President Chen Shui-bian on corruption charges in connection with his handling of a secret diplomatic fund, significantly adding to pressures on Chen to resign.

At an extraordinary late night meeting, Chen's ruling Democratic Progressive Party demanded that the president explain his alleged role in the scandal to the Taiwanese public.

"We strongly demand that President Chen Shui-bian explain the unclear parts from the prosecutors' report," said party chairman Yu Shyi-kun.

The prosecutors' move against Chen came after a monthslong probe of how the presidential office handled the fund, which is used to sustain Taiwanese diplomatic efforts abroad.

Click here to go to FOXNews.com's Asia Center.

The fund is secret because of the sensitivity of Taiwanese attempts to maintain its fragile overseas foothold in the face of moves by rival China to undermine its position around the world.

Chen's wife, Wu Shu-chen, and three former presidential aides were indicted in connection with the handling of the fund on charges of embezzlement, forgery of documents and perjury, said Chang Wen-cheng of the Taiwan High Prosecutors' Office.

He said that between 2002 and 2006, Wu took possession of 14.8 million New Taiwan dollars (US$450,000) in fund expenses not covered by receipts.

Underlining the gravity of the situation, Presidential Office spokesman David Lee said that Vice President Annette Lu had been called to Taipei from a trip to the outlying island of Penghu.

Lu would replace Chen were he to leave office before the end of his term in May 2008.

Lee would not comment on other aspects of the case.

Lu, who studied at Harvard, is a strong supporter of Taiwanese independence.

That stance has earned her the sobriquet "scum of the nation" from rival China, which has repeatedly threatened to go to war if the island tries to make permanent its 57-year-old split from the mainland.

Late Friday, a small party allied with the president said it would support a recall motion against him if it comes up in the island's Legislature.

The Taiwan Solidarity Union has 12 seats in the 221-seat body. Its support for a recall move would not be enough to push it over the required two-thirds threshold, but underscores the gravity of Chen's situation even among his supporters.

Also late Friday, some 3,000 anti-Chen demonstrators gathered outside Taipei's main railway station, cheering the prosecutors' findings and calling for Chen to step down immediately.

Since early this year Chen has been on the defensive over a number of alleged corruption scandals involving his family and inner circle. He has consistently maintained his innocence.

Chang told reporters that while Chen would not be indicted now, there was a strong possibility he would be after he leaves office.

Under Taiwanese law a sitting president cannot be indicted other than on charges of sedition.

Opposition leader Ma Ying-jeou of the Nationalist Party called on Chen to resign without delay.

"He has lost the people's trust and respect, and as he is burdened with scandals, he can no longer lead the people nor effectively represent the country," Ma said. "We urge him to resign as soon as possible."

Late Friday Ma said his party would launch a recall drive against Chen if the president did not resign by Monday.

With the TSU's support, Ma's Nationalists and their People First Party ally would need the votes of about a dozen lawmakers from Chen's DPP for the recall measure to be presented to Taiwanese voters in a referendum.

The party has so far been steadfast in its support for the embattled president, who has survived two opposition attempts to put the issue of his recall to Taiwanese voters, and brushed aside weeks of boisterous street protests by anti-Chen demonstrators.

However, Yu's announcement demanding a clear accounting from Chen highlighted growing concern in party ranks that continuing support for the president could harm its long term electoral prospects.

Chang said Chen had met with prosecutors twice to discuss the handling of the fund but that serious discrepancies had emerged in his testimony.

"Chen presented documents about six cases in which secret diplomatic funds were used, but investigation by prosecutors showed that only (the documents for) two cases were accurate," Chang said.

The probe into the presidential fund began in July, after the Ministry of Audit said irregularities were found in the presidential office's accounting of its expenditures.

Earlier, opposition lawmakers had begun to look into the fund after a Taiwanese businesswoman living in Australia accused a close friend of Wu of acquiring invoices from her company, purportedly for Wu's personal use.