Mr Trump, who owns the Miss USA pageant, made the announcement on Tuesday.

The 21-year-old Prejean failed to reveal before last month's pageant that she had posed in her underwear as a teenager.

Mr Trump says the pageant has determined the photos are 'fine.'

She also sparked controversy when she answered a judge's question by saying she believes marriage should be between only a man and a woman.

It is widely believed that her traditional views of marriage cost her the title of Miss USA.

California is afterall one of the most liberal states in America, the city of San Francisco is a known pro-gay centre and is among the first cities in the US to legalise gay marriages.

The title of Miss USA went to Miss North Carolina Kristen Dalton instead.

Officials of the Miss California USA pageant earlier criticised some of Miss Prejean's actions but said it's not up to them to decide whether she should be stripped of her crown.

But admitted only Mr Trump could make that decision.-- AP