National Prosecuting Authority head Bulelani Ngcuka is planning to bring a defamation lawsuit against a Sunday newspaper after it published allegations that he was an apartheid spy.

The authority's spokesman, Sipho Ngwema, rejected the allegations as "lies and fabrications", saying Ngcuka's lawyers would serve a summons on City Press.

The legal challenge, which could extend to the sources of the story, is another example of the tension following the corruption investigation of Deputy President Jacob Zuma by Ngcuka's unit.

Reports were published saying he was resigning from his position and that he had been asked to return a car that he had been allocated as a result of an administrative error. "We are going to take legal action against City Press because we told them that the people who planted the story are desperate individuals who (think) that because of their ability to manufacture lies they are untouchable," said Ngwema.

The story published in City Press yesterday was based on leaked documents alleging that the African National Congress (ANC) intelligence unit in the 1980s investigated Ngcuka after suspecting him of being a spy for the apartheid government's National Intelligence Service.

Zuma headed the ANC intelligence unit and the allegations about Ngcuka may be an attempt to show that the Scorpions' investigation of Zuma's role in the arms deal stems from old hostility between Ngcuka and Zuma in the 1980s.

Presidential spokesman Bheki Khumalo declined to comment on the spying allegations.

With acknowledgements to Nontyatyambo Petros and Business Day.