The Senate is investigating allegations of illegal kickbacks in a controversial 329 million-dollar contract for a national broadband Internet network that has since been cancelled by Mrs Arroyo.

'There is no cause for the president to resign,' said Ms Lorelie Fajardo, a spokesman for Mrs Arroyo, stressing that the public should 'exercise sobriety and fairness' over the revelations.

A mid-level government official said to be privy to the negotiations has testified before a Senate inquiry that Mrs Arroyo's husband, Jose Miguel, and former elections chief Benjamin Abalos tried to get kickbacks from the telecoms deal with Chinese firm ZTE.

Mrs Arroyo has suspended the deal, but recent revelations in the Senate inquiry have led to daily street protests since last week.

On Tuesday, activists held scattered and largely peaceful street protests around Manila carrying 'Gloria resign' slogans.

Ms Fajardo said that while Mrs Arroyo's husband has been named in the investigation, it has not 'directly linked the president in any way'.

'Innuendos and the habit (of political opponents) to link the president is no cause for the president to resign,' she said.

Powerful Roman Catholic bishops as well as several business leaders have praised the key witness, Rodolfo Noel Lozada, and urged the public to rally behind him. The military meanwhile said it remained solidly behind Arroyo and warned troops from taking sides.

Sergio Ortiz Luiz of the Philippine Exporters Confederation Inc. on Tuesday warned that the daily protests were 'beginning to take a toll on investments' and urged the Senate to speed up its probe.

'I think they should file the case so that there will be a conclusion to this,' Mr Luiz said.

Mrs Arroyo's six-year term expires in 2010, but she has been hounded by allegations of corruption since her first day in office. She has survived three impeachment attempts in Congress as well as two coup attempts. -- AFP