Spanish Prime Minister Mariano Rajoy will appear before parliament on Thursday (August 1) to face questions over a corruption scandal, relenting to pressure from the opposition which had threatened a no-confidence vote if he refused.

Rajoy's People's Party (PP) had used its strong majority in parliament to block his appearance but pressure mounted when the opposition Socialists threatened a symbolic no-confidence vote.

Rajoy has denied any wrongdoing in a scandal involving allegations of illegal donations by construction magnates that were supposedly distributed as cash payments to him and other party leaders.

The scandal comes at a bad time for Rajoy who had hoped tentative signs of economic recovery in Spain might restore a public image already damaged by tough spending cuts and months of social unrest amid a prolonged recession.

His party's former treasurer, Luis Barcenas, was arrested in June and charged with bribery, money laundering, tax fraud and other crimes. He says he paid 90,000 euros ($118,200) to Rajoy and party Secretary General Maria Dolores Cospedal in 2009 and 2010.

Presented by Adam Justice