The treasurer of Brazil’s ruling Workers’ Party, Joao Vaccari, has stepped down, after being arrested over corruption at oil giant Petrobras.

Mr Vaccari is  charged with an alleged scheme in which the party received dirty money from inflated deals between oil executives and construction firms.

Party president Rui Falcao said he still had confidence in Mr Vaccari.

He is the closest ally of President Dilma Rousseff to have been arrested in the broadening scandal.

The arrest places further pressure on the president, who has faced street protests, impeachment calls and plummeting opinion ratings since her re-election four months ago.

Ms Rousseff served as the head of Petrobras for much of the period when the corruption took place, but she has not been implicated in the scandal.

More than 40 politicians, including the heads of both houses of congress, are being investigated over the affair.

Prosecutors say Mr Vaccari served as the Workers’ Party’s liaison in a scheme where oil officials colluded with construction firms to artificially inflate billions of dollars worth of contracts.

According to oil officials who are testifying for the prosecution, some of the cash skimmed from the deals was diverted to the party and its allies.  The party remains sure of Mr Vaccari’s innocence, “not only because of his conduct, but because in a democratic state everyone has the fundamental right to be considered innocent until proven guilty”.

When he was first questioned in February Mr Vaccari said in a statement that the Workers’ Party only receives legal contributions and that he would co-operate with investigators.  He said he answered their questions “with transparency”.

Mr Vaccari was charged last month, becoming one of the most powerful political figures to have been named in the scandal.His arrest was reportedly ordered because of concerns that he may influence the investigation or flee the country.