The attorney of Silvio Berlusconi denied the accusations on Thursday, and charged that they had been made public to damage the premier before national elections next April.
Prosecutors were accusing Berlusconi of ordering the payment of at least $600,000 to British lawyer David Mills in 1997 to give false testimony in two trials against the premier, newspaper Corriere della Sera reported, citing court documents.
In a detailed statement, Berlusconi lawyer Niccolo Ghedini denied any payment had been made.
Mills had been a key prosecution witness whose statements against Berlusconi in one of the trials in question had been "decidedly unfavourable", said Ghedini, also a deputy in Berlusconi's Forza Italia party.
He accused Corriere della Sera, a moderate daily that is Italy's best-selling broadsheet, of publishing details of the investigation that should have been kept secret, and said it had done so to coincide with "delicate moments in the life of the country".
General elections pitting Berlusconi against Romano Prodi, the former prime minister, are set for 9 April.
In Italy, placing suspects under investigation is a formal step taken before prosecutors decide whether to seek indictments against them.
Berlusconi and Mills had declined to attend a questioning session with Milan prosecutors earlier this month because they first wanted more information about the accusations, Cecconi said.
Berlusconi says he is a victim of
politically motivated litigation
Corriere said prosecutors had accused Mills of giving false testimony on 20 November 1997 in a trial in which Berlusconi was charged with bribing tax officials to obtain favourable audits at companies belonging to his media group, Fininvest.
Specifically, they said Mills had testified that he had learned of a separate investigation into Berlusconi holding company All Iberian through the newspapers.
He later acknowledged that he had spoken by telephone to Berlusconi about the case in 1995, the paper cited court documents as saying.
Mills, an international corporate lawyer, has long denied direct links to Berlusconi although he has said in media statements that he served as a lawyer to Berlusconi's companies for several years.
At a second hearing on 12 January 1998 in a trial in which Berlusconi was accused of funnelling money through All Iberian to fund the socialist party of Bettino Craxi, the former Italian premier, in 1991 and of false book-keeping to cover up the transfers, Mills said he could not comment on the ownership of two offshore companies, Century One and Universal One.
He later acknowledged that the two companies were controlled by Berlusconi, according to the Corriere report.
Berlusconi was convicted in both cases in 1998.
However, he was later acquitted by Italy's highest appeals court in 2001 for the Fininvest case, and cleared in the All Iberian case because the statute of limitations had run out and false book-keeping had been decriminalised.