More than 500 protesters rallied outside the headquarters of Spain’s ruling People’s Party on Thursday night after a newspaper alleged that Prime Minister Mariano Rajoy had accepted secret cash payments.
Many called for senior members of the party to resign.
The newspaper published what it said were almost two decades of handwritten accounts, maintained by party treasurers.
Editors claimed the statements showed more than 10 years worth of payments to Rajoy worth about 25,000 euros a year.
The party has threatened legal action against the El Pais newspaper describing its report as "lies".
"This party categorically denies the content of the documents that have been published. I have spoken to the Prime Minister this morning as normal and I have to say that he is very relaxed," said party secretary-general Maria Dolores de Cospedal.
Spain’s opposition socialists have seized on the scandal.
"I want to ask the Prime Minister for a complete explanation because this information relates to him directly. I want him to come out and answer just two simple questions. Did he receive those payments? Yes or no? And also if he did, how did he earn it? Was it laundered money?" said Socialist leader Alfredo Perez Rubalcaba.
An online protest has already gathered more than 100,000 signatures calling for anyone linked with the payments scandal to resign.
Rajoy has called an urgent meeting of the party on Saturday.