Spanish PM Mariano Rajoy has admitted to MPs that he made a “mistake” in trusting disgraced former colleague Luis Barcenas.

Mariano Rajoy also told MPs that claims he was corrupt were “lies and manipulations”, and defied calls for his resignation.

He is appearing in parliament to answer claims over illegal payments from a slush fund run by the Popular Party’s ex-treasurer, Luis Barcenas.

The claims sparked widespread anger and anti-government protests.

Revelations of apparent corruption have touched a nerve in Spain, hit by a double-dip recession and high unemployment.

Clashes erupted between anti-government protesters and police in mid-July after more than 1,000 people gathered outside the Partido Popular (Popular Party, PP) headquarters calling on the government to quit.

Mariano Rajoy appeared before MPs after threats of a no-confidence vote.

In opening remarks, he said he was appearing to rebuff the “lies, manipulations and malicious insinuations encouraged by certain political leaders” over the scandal.

Mariano Rajoy suggested that the Spanish economy was beginning to recover from years of crisis, and expressed concern that a continued focus on the scandal was damaging Spain’s image.

For the first time, he admitted making a mistake by putting trust “in someone who we now know did not deserve it”. But he denied “committing the criminal offence of covering up for someone who is alleged to be guilty”.

Mariano Rajoy has admitted to MPs that he made a “mistake” in trusting disgraced former colleague Luis Barcenas

Luis Barcenas is in custody while being investigated over other corruption allegations.

Mariano Rajoy repeated that he would not resign, and concluded by saying a package of measures would be implemented to strengthen anti-corruption safeguards.

In response, the leader of the country’s main opposition Socialist Party, Alfredo Perez Rubalcaba, said Mariano Rajoy was not in the chamber to debate the state of the Spanish economy.

He said it was Mariano Rajoy’s “resistance” to answering parliament that was causing damage to Spain, and said the PP had won elections over 20 years on the back of a system of illegal financing.

Even if Mariano Rajoy did not respect parliament, he said, “he should respect the intelligence of Spaniards”.

“You must go, Mr. Rajoy,” he said.

Each parliamentary group will have 10 minutes to ask questions and set out its own position, with individual deputies also allowed to put a limited number of questions.

On Wednesday, the deputy leader of the opposition Socialists, Elena Valenciano, said her party’s aim was “two-fold – that the prime minister tell the truth and that he quit his post.

“If we don’t get that [on Thursday], we will keep insisting and fighting for it.”

The scandal originated in a 2009 judicial investigation into corrupt payments involving PP members.

In January this year, El Pais newspaper published an alleged list of illegal payments within the party.

The list was signed off by Luis Barcenas, who is currently in custody on corruption and tax fraud charges, with his role in the scandal still being investigated.

He originally denied allegations that he wrote documents, but later admitted they were in his handwriting.

The former party treasurer now says he made numerous bonus payments – in cash – to Mariano Rajoy and other senior party members, out of the party slush fund of donations by businesses.

Mariano Rajoy and other PP members have repeatedly denied that they received illegal payments and have accused Luis Barcenas of trying to blackmail them.

The PP’s deputy leader, Maria Dolores de Cospedal, has been summoned to appear before investigating judge Pablo Ruz on August 14.

Calls for Mariano Rajoy to resign intensified after private text messages published by El Mundo newspaper suggested that he had friendly ties to Luis Barcenas from May 2011 to March 2013.

Mariano Rajoy admitted sending messages of support to Luis Barcenas.

However, throughout the scandal, Mariano Rajoy has at no point given any indication he would resign.

The PP was handed a clear mandate by Spanish voters at the end of 2011 and as a result Mariano Rajoy and his party enjoy a clear majority in parliament.

The corruption allegations coincide with Spain’s worst economic crisis for decades, and have threatened to destabilize government attempts to shore up public finances and bring the recession to an end.

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