German President Christian Wulff has announced his resignation in a scandal sparked by allegations of favours he allegedly received before becoming head of state.

The move creates a new problem for Chancellor Angela Merkel.

Mr Wulff announced his immediate resignation a day after the slow-burning affair escalated dramatically with a request by prosecutors for Parliament to lift his immunity from prosecution.

He is stepping down after less than two years in the job. He was Mrs Merkel's candidate for the presidency in 2010.

His resignation is potentially awkward for her - providing a major domestic distraction as she grapples with the eurozone debt crisis.

A successor must be elected by a special parliamentary assembly within 30 days.

The move came as Mrs Merkel called Italian premier Mario Monti and cancelled a planned trip to Rome.

Prosecutors have asked for parliament to lift Wulff's immunity - an unprecedented move against a German president.They said there is "initial suspicion" that Mr Wulff improperly accepted benefits from a German film producer friend.