TAIPEI (AFP) - Taiwan prosecutors said Wednesday (Oct 14) they are investigating claims the embattled ruling Kuomintang (KMT) tried to bribe unpopular presidential candidate Hung Hsiu-chu to step down.

It is the latest setback for the KMT which is widely tipped to lose the presidential elections in January.

The party is in disarray after endorsing pro-China Hung in July to run for the leadership despite conservative views that fly in the face of public sentiment as fears grow over Beijing's influence on the island.

Known as "xiao-la-jiao" or "little hot pepper" for her straight-talking style, she is trailing behind DPP candidate Tsai Ing-wen in the polls, but has refused to heed calls to stand aside.

A legislator from the opposition Democratic Progressive Party (DPP) filed a complaint to prosecutors last week, alleging KMT chairman Eric Chu had offered Hung benefits to persuade her to quit the presidential race, violating election laws.

The complaint by Chen Ting-fei says Chu asked Hung to step down on three separate occasions, citing media reports.

Chu violated the presidential election act by "offering bribes or other undue benefits" to persuade Hung to abandon her campaign, according to a copy of the complaint.

No original evidence was given by Chen.

Unsourced local media reports have said Hung demanded NT$500 million (S$21.28 million) to step down as candidate.

"We've received the case and should open the investigation today," Kuo Wen-tung, director of the Supreme Prosecutors Office's special investigation division, told AFP Wednesday.

"If during the course of investigation we need to summon Chu, we will do so," Kuo said.

The KMT and Hung have both denied any bribes changed hands.

Hung has also denied she demanded money to end her campaign.

The KMT suffered its worst ever defeat in local elections last year, with its Beijing-friendly policy a key factor.

Party big hitters hung back from the presidential nomination in the face of a likely loss, leaving wildcard Hung to take the reins.

The KMT has called an emergency congress on Saturday to vote on whether Hung should be replaced.

Chu, currently mayor of New Taipei City, is expected to be nominated instead.

"This is a critical moment of survival or death for the KMT," he said at a party committee meeting Wednesday.

Taiwan split from China in 1949 after a civil war and is self-ruling, but Beijing sees the island as part of its territory awaiting reunification - by force if necessary.

The KMT espouses a "one China, different interpretation" model, tacitly agreed with Beijing and known as the "1992 consensus", which leaves Taiwan to assert its sovereignty.

Hung, however, has historically taken a pro-unification stance.