Nicolas Sarkozy sued a website that claimed Moamer Kadhafi financed his 2007 presidential election, seeking to spin the charge in the crucial final week before France goes to the polls.
Right-wing incumbent Sarkozy is clawing back points from Socialist frontrunner Francois Hollande, whose own presidential bid has been hit by the intrusion of disgraced IMF chief Dominique Strauss-Kahn into the campaign.
Both candidates have been appealing to the 18 percent of voters who chose anti-immigrant candidate Marine Le Pen in the April 22 first round, with Sarkozy riding on the back of rhetoric inspired by her National Front party.
Sarkozy on Monday dismissed as a "crude forgery" a document published by left-wing investigative website Mediapart alleging that the former Libyan dictator agreed to give 50 million euros ($66 million) to Sarkozy's campaign in 2007.
"We will file a suit against Mediapart... This document is a crude forgery, the two people supposed to have sent and received this document have dismissed it," Sarkozy told France 2 television.
Sarkozy and his supporters believe that he is relentlessly targeted by "biased" left-wing media.
"There's a section of the press, of the media, and notably the site in question whose name I refuse to mention, that is prepared to fake documents. Shame on those who have exploited them," Sarkozy said.
Paris prosecutors later in the day opened a preliminary inquiry into Mediapart following Sarkozy's complaint, judicial sources said.
Claims that Kadhafi financed Sarkozy's 2007 campaign are not new, but Mediapart's document bearing the signature of Libya's former foreign intelligence chief Moussa Koussa is.
The letter was addressed to Bashir Saleh, Kadhafi's former chief of staff and head of Libya's $40 billion sovereign wealth fund, who is currently resident in France.
But Saleh's lawyer said he had "grave reservations" about the document while Koussa, who lives in Qatar, said: "All these allegations are false."
Hollande said that it was up to judges to decide on the allegations.
"If it's a fake then the site will be found guilty, if it's not a fake then he (Sarkozy) will have some explaining to do," Hollande said.
Socialist Party spokesman Benoit Hamon took a stronger line and said: "We call on the justice system to take up these disclosures by the Mediapart site."
"Obviously Nicolas Sarkozy has a complicated history with Mr. Kadhafi," he said, speaking at a campaign event for French voters in Algeria, allowing however that "the facts are yet to be verified".
Hollande's team meanwhile sought to play down the re-emergence of one-time presidential hopeful Strauss-Kahn after he attended a Socialist lawmaker's birthday party in Paris.
Lawmaker Julien Dray on Saturday invited senior members of his party to the party at a popular disco on the notorious Rue Saint Denis, a street long associated with prostitution.
But Dray did not warn his guests he had invited Strauss-Kahn, who became a toxic figure last year when he was accused of sexual assault in New York and is now under investigation in France over alleged ties to a vice ring.
"He no longer has a role in political life and thus should not be part of a campaign nor in any images that could potentially lead people to believe he's coming back," Hollande said on Sunday.
Hollande's former partner Segolene Royal, who was beaten by Sarkozy in the 2007 presidential race, said the former IMF chief's presence at the party was "inconsequential."
"I at first thought it was a joke. Then I thought that it was in very bad taste," she told BFM-TV, adding: "I left immediately."
"I don't want to meet DSK, given what happened, which damaged the dignity of women," Royal said.
An IPSOS poll published Monday said Hollande would win Sunday's run-off 53 percent to 47 percent, after the Socialist dropped a percentage point to Sarkozy compared with the last poll on April 22.
Nevertheless, 22 percent of those questioned said they would go and vote but declined to say for whom.
The campaign will centre Tuesday on France's May Day celebrations, with Sarkozy staging a rally on a day traditionally dominated by trade unions.
Sarkozy will address a campaign rally at the Trocadero in Paris's chic 16th district to speak about work "values" as unions stage a traditional march ending at the capital's iconic Place de la Bastille.
Le Pen will meanwhile rally her supporters in Paris in memory of Joan of Arc, as her far-right tradition dictates. She is expected to call on them to stay home instead of voting for either Sarkozy or Hollande.
The two candidates will face off in a televised debate Wednesday that analysts say could be Sarkozy's last chance for a breakthrough.