Hundreds of Turkish police officers were dismissed from their posts overnight and some moved to traffic duties, local media said, further undermining a graft investigation Prime Minister Tayyip Erdogan portrays as a covert attempt by a rival to usurp state power.

Erdogan, facing the biggest challenge of a ten-year rule that has seen the military banished from politics, the economy booming and Ankara pressing its influence in the Middle East, portrays the operation as a "dirty plot" by followers of a US-based Islamic cleric. The cleric backs no political party but enjoys broad influence in the police and judiciary.

The government has hit back by sacking or reassigning hundreds of police across the country since the investigation emerged last month, while a second investigation into large infrastructure projects championed by Erdogan has been blocked.

Around 350 officers in Ankara, including members of the financial and organised crime, smuggling and anti-terrorism units, were dismissed or reassigned overnight to new roles including traffic or district duties, the media reports said.

Ankara police declined to comment.

Prosecutors meanwhile deepened their investigations, with at least 25 more people including public officials detained as part of an investigation into the activities of a port in the Aegean province of Izmir, broadcaster CNN Turk said.

"Neither side appears willing to give up at this stage in this high stakes battle for control of the state," said Timothy Ash, head of emerging markets research at Standard Bank.

The corruption scandal is shaking investor confidence at a time when the lira currency is languishing around record lows, inflation is rising and growth slowing. As much as its Islamist-rooted ideology, AK Partys support has relied on its avowed commitment to fight corruption and its economic record.

Erdogan and the Hizmet movement of cleric Fethullah Gulen, which exercises influence through a network of contacts built on sponsorship of schools and other social and media organisations, accuse each other of manipulating the police and compromising the independence of the judiciary.

"Purges, or more accurately massacres, are being carried out of civil servants who are fulfilling their duties defined by the law," Gulen said in a letter to President Abdullah Gul, written as the row intensified in late December but published by the pro-government Yeni Safak newspaper on Monday.

Erdogan, who has won three general elections and remains widely popular, casts the scandal as an attempted "judicial coup", a foreign-backed plot by those jealous of his success.

The clash between the erstwhile allies has spiralled into one of Erdogan's biggest challenges. His decade in power has seen strong economic growth and stability but growing concern about what critics see as his authoritarian style.

Hundreds of thousands went onto the streets last summer in anti-government protests that Erdogan also portrayed as part of a foreign-backed conspiracy.

The scandal - which exploded on December 17 with the detention of businessmen close to the government and sons of three cabinet ministers - has weakened Erdogan's AK Party just before local elections due in March and presidential polls in August.-Reuters