MOSCOW (AFP) - Russian prosecutors on Monday accused protest leader Alexei Navalny of breaking the law by receiving donations from foreign nationals, a claim he denied in a radio interview.

Navalny, 37, a charismatic lawyer and a star speaker at anti-Putin rallies, is running for Moscow mayor against a Kremlin-backed incumbent. He was dramatically released from prison last month to allow him to stand.

"A check has confirmed information about foreign financing of Alexei Navalny," the prosecutor general's office said in a statement published on its website.

Under Russian law, it is illegal for a candidate to spend money donated by foreigners on a political campaign.

The statement said 300 foreign nationals and anonymous donors based in countries including the United States gave Navalny money using a Russia-based Internet payment system.

Prosecutors said they had handed the information to the interior ministry, should it decide to open a criminal case.

Navalny, who is shaping up to be the main challenger to pro-Putin mayor Sergei Sobyanin in the election, denied the claim.

"All the payments that are transferred to our electoral account are checked by the city electoral commission. If they don't like them, we return those payments, and we do this quite often," Navalny told the Moscow Echo radio station.

"In this sense we have the most transparent campaign of anyone." Navalny has conducted a highly professional campaign for mayor, taking to Moscow's streets to meet voters.

He was sentenced to five years in prison last month after being convicted of embezzlement in a widely disputed verdict. In a surprise decision, a higher court temporarily granted him freedom, allowing his mayoral campaign to go ahead.