Chen Liangyu has been dismissed from his post in Shanghai, and suspended from the nation's politburo, according to the Xinhua news agency. The move is widely seen as part of a power play by Hu Jintao, the Chinese president.

"The Central Committee has decided ... to dismiss comrade Chen Liangyu of his post of party secretary of the Shanghai Committee," Xinhua said on Monday, citing a statement from the politburo.

It was the highest-level sacking involving government corruption since former Beijing mayor and politburo member Chen Xitong was removed from his post on corruption charges in 1995.

He was sentenced to 16 years' imprisonment.

Growing scandal

One of the chief accusations levelled at Chen Liangyu concerned the embezzlement of around $400 million from Shanghai's pension fund.

The scandal has already led to the dismissal of other senior officials from China's most populous city.

The politburo accused Chen of "violating regulations" in the use of the social security funds, Xinhua said

He was also accused of "seeking benefits for heads of illegal enterprises (and) protecting people around him who had seriously violated discipline and the law".

'Serious violations'

Chen had further "used his position to seek unnormal benefits for his relatives" and had committed "other serious violations of discipline", the announcement said.

Speculation had been mounting for weeks about Chen's future after his former secretary, Qin Yu, a district governor of Shanghai, was removed from his post in late August for his alleged role in the handling of the pension fund.

The sackings revolve around a probe into the illegal investment of about 3.2 billion yuan ($400 million) in speculative real estate and highway deals from Shanghai's $1.25 billion pension fund.