"The trio have violated laws by using their positions as public servants to claim special expenses with false receipts," Chen Yun-nan, director of the anti-corruption task force in the prosecutors' office, said.
Lu is accused of claiming $170,000 in expenses, using more than 1,000 false receipts, between December 2000 and May 2006 in her capacity as vice-president, he told reporters.
Lu, the highest-ranking woman in Taiwan's government, expressed shock at her indictment.
"It was like a thunderbolt out of the blue. I have to study [the case] carefully," she said.
"My integrity cannot be questioned. I have no idea on what basis they have charged me, since all of my special expenses were used in public affairs."
"My integrity cannot be questioned.
I have no idea on what basis they have charged me, since all of my special expenses were used in public affairs"
Annette Lu, Taiwan's
She had stood for the DPP's nomination in the 2008 presidential race, but withdrew early in the process.
Yu allegedly claimed about $72,000 in special expenses with false receipts while serving as DPP secretary general, vice-premier and premier between October 2000 and December 2005.
Chen Tan-sun had claimed $11,000 in false expenses from July 2004 to June 2006, prosecutors said.
Lin Chia-lung, party general secretary, defended the accused, saying: "The three have contributed a lot to Taiwan's democratisation and it is unlikely they used false receipts.
"We believe in their innocence and we hope the judicial system will deal with their cases fairly."
If convicted of corruption, they face a minimum of seven years in prison. The forgery charge is punishable by up to seven years in prison.
The biggest of the corruption scandals that have rattled Taiwan involves Wu Shu-chen, the president's wife, who is on trial for corruption and forgery after allegedly embezzling nearly $500,000 from state funds.
The president was named as a suspect in the case, but escaped immediate prosecution because he has presidential immunity.
Their son-in-law Chao Chien-ming is currently appealing against a seven-year jail term and a fine of $900,000 for insider trading.