The latest controversy arose this weekend when Veja magazine published an article showing documents that appear to demonstrate a link between top officials of the governing Workers' Party and a scheme to buy votes from legislators in Congress.
The documents appear to implicate Workers' Party president Jose Genoino, secretary-general Silvio Pereira and treasurer Delubio Soares.
On Monday evening, Pereira resigned from his post in the party and asked for a full investigation into his alleged involvement in the scandal.
The Workers' Party executive committee was to meet on Tuesday, and many think Genoino and Soares could also resign.
Calls for resignation
"They should step down, but that's not enough. There should be an internal investigation," said Cristovam Buarque, a former education minister and one of the party's most respected members.
"If this doesn't happen we will lose millions and millions of voters," he added. "It will also create the impression that we're all involved."
The corruption scandal erupted in June, when Roberto Jefferson, head of the government-allied Brazilian Labour Party, accused the government of paying lawmakers monthly bribes of 30,000 reals ($13,000) to give the ruling coalition enough votes to pass legislation.
Jefferson said the money was distributed by Soares, the party's treasurer, with the approval of presidential chief of staff Jose Dirceu, who resigned last month.
The president's chief of staff,
Jose Dirceu, resigned last month
Workers' Party members have denied any illegal activity and demanded that Jefferson provide proof of the payoffs.
Jefferson said he had no proof. But the allegations gained some credibility when bank records showed that advertising executive Marcos Valerio, accused by Jefferson of making the payoffs for the Workers' Party, withdrew millions of
reals on the dates that Jefferson said Valerio traveled to Brasilia with suitcases full of money for congressmen.
The scandal has tarnished the image of the Workers' Party, long hailed as a bastion of ethics and integrity. Some fear it could sink Lula's chances of re-election next year and might even cause his impeachment.
Impeachment "is a possibility, but we have to wait and see what else is going to explode", said David Fleischer, a political science professor at the University of Brasilia. "Right now Lula is going to try and be a Teflon president, saying, 'It wasn't me, it was these other guys below me' and I'm cleaning things up."
Lula, a grade school dropout and former factory worker who became Brazil's first elected leftist president, has outshined his administration in opinion polls.
But in recent months, that gap has narrowed, and it's unclear how long Lula can remain above the fray, Fleischer said.
"They must step down and this must be done urgently," Workers' Party official Francisco Alencar said, referring to the accused party officials. "Because if not, the party will fall prisoner to the scandal."