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Germany's president resigned Friday after a string of scandals, handing Chancellor Angela Merkel a political headache at home as she battles to lead Europe from its debt crisis.

"I am ... today stepping down from the office of federal president to free up the way quickly for a successor," Christian Wulff said in a dramatic three-and-a-half-minute televised statement from his Bellevue palace.

Germany needs "a president that enjoys the trust of not only a majority, but a broad majority of citizens," said a sombre Wulff, with his wife Bettina at his side.

"The developments of the last days and weeks have shown that this trust and therefore my effectiveness have been damaged.

"For this reason, it is no longer possible to carry out the office of president both domestically and abroad the way it needs to be done," added the head of state.

"I have made mistakes, but I was always honest," he said.

Prosecutors in the Lower Saxony state where Wulff was formerly premier said late Thursday they had asked parliament to lift his immunity in order to investigate allegations he abused his position.

Merkel's hand-picked choice for Germany's head of state has been battered by almost daily allegations in the media that he accepted favours when he was premier of Lower Saxony.

Wulff is from the same conservative Christian Democratic Union (CDU) party as Merkel who cancelled a planned trip to Rome to meet Italian premier Mario Monti on the euro crisis to make her own statement later.

Wulff's role is largely ceremonial but carries important moral weight and the announcement by the prosecutor in Hanover, the capital of Lower Saxony, marks the first time the German parliament has been asked to lift presidential immunity.

The 52-year-old president has been rocked by scandals and allegations since mid-December largely over his connections to wealthy businessmen, initially over an advantageous home loan from a friend's wife.

He then faced claims he tried to hush up the story, as well as reports of free holidays accepted from friends.

But the Hanover prosecutor's case focuses on his relationship with film producer friend David Groenewold who is also facing investigation over dealings between his firm and Lower Saxony while Wulff was state premier.

He also reportedly picked up the bill for Wulff's hotel during a short holiday in 2007. Wulff's lawyers have said he repaid the money in cash later.

Speculation about whether Wulff could remain in office reached fever pitch after the prosecutor's announcement following two months of almost daily media reports about Wulff.

"I assume that the parliamentary commission for immunity and the Bundestag (lower house of parliament) ... will vote in favour of the request by the Hanover prosecutor," deputy head of the CDU parliamentary group Michael Meister told Deutschlandfunk radio.

"It's over now, Christian Wulff must resign," demanded the influential Bild daily in a Friday editorial.

Wulff landed in hot water in December when Bild reported he had failed to declare a 500,000-euro ($660,000) home loan at an advantageous interest rate he accepted in 2008 while premier of Lower Saxony.

He then left an angry voicemail for the paper's editor-in-chief over the story and publicly crossed swords with him over claims he had tried to hush up the article's publication.

Wulff's presidency was rocky from the start.

His election in 2010 proved humiliating for Merkel as members of her own coalition broke ranks and refused to vote for him in parliament amid a strong challenge from a former East German dissident, a political outsider.

Wulff, who had once been considered a potential challenger to Merkel, only eked out a victory in the third round.

AFP