Dominique de Villepin said in a radio interview on Tuesday he was "indignant" at accusations that he ordered an intelligence chief to undertake a secret investigation into the interior minister, Nicolas Sarkozy.
The accusations are connected to a political and legal corruption inquiry known as the Clearstream affair.
They come just weeks after de Villepin was forced into a humiliating climbdown over a proposed youth job law following massive street protests by students and unions.
In his latest setback, de Villepin faces accusations that he asked an intelligence agent in 2004 to secretly investigate Sarkozy for allegedly receiving kickbacks from the $2.8 billion sale of French frigates to Taiwan in 1991.
"Nothing justifies a departure today," Villepin told Europe-1 radio, "We've lived for decades with the same scenario."
The scandal, described as a "French Watergate", comes exactly a year before presidential elections in which Sarkozy is hoping to be selected as the candidate for the governing UMP party.
De Villepin's chances of securing that role appear to be dwindling despite being the favoured choice of president Jacques Chirac.
"I have never asked for an investigation on any political personality from the right or left"
Dominique de Villepin
A poll by LH2 published Tuesday in the daily Liberation gave de Villepin a popularity rating of just 20%, as his appeal continues to decline after recent setbacks and riots by disenfranchised youths in poor suburbs last Autumn.
Leading figures in the opposition have called on de Villepin to resign, and asked Chirac to take action. The French media have said that resignation must now be suggested.
The Clearstream scandal began to become public in 2004, when Judge Renaud Van Ruymbeke received a CD-ROM falsely accusing Sarkozy and other ministers of holding secret accounts with Luxembourg-based clearing house Clearstream.
While the hunt is still on for the whistleblower, Sarkozy's camp has rounded on Villepin, accusing him of ordering an intelligence probe into the claims and of failing to clear his name after they turned out to be fabricated.
De Villepin, who was foreign minister at the time, says he ordered a discreet intelligence inquiry after the corruption claims were made, but said that: "At no time was Nicolas Sarkozy mentioned in that conversation."
Sarkozy (L) and de Villepin have
hardly hidden their rivalry
De Villepin pointed to an interview published on Tuesday in the daily Le Figaro as "proof" of no wrong-doing.
General Philippe Rondot denied in the Le Figaro interview on Tuesday having been charged by Villepin to investigate Sarkozy.
This contradicts information published last week by the daily Le Monde, alleging that Rondot had specifically been asked by Villepin to investigate Sarkozy and other political figures in the case.
"I have never asked for an investigation on any political personality from the right or left," de Villepin said.
The scandal is good for Sarkozy as it detracts attention from criticism he is facing over a proposed immigration bill, which he says will help France choose more skilled immigrants rather than just take any newcomers who arrive.
The son of a Hungarian immigrant, Sarkozy has had to defend himself against charges he is running a xenophobic drive to poach votes from the far-right's front-runner Jean-Marie Le Pen, who launched his presidential campaign on Monday.