Kenneth Starr, the Whitewater prosecutor, informed lawyers at a trial opening in Little Rock, Arkansas, that Mr Lindsey would be named as an "unindicted co-conspirator", a term usually used when the authorities think an illegal act was committed but are unable to prove it.

Mr Lindsey is known in Washington as the president's "enforcer", his closest, most reliable counselor. They have been together since the 1960s when both worked for Senator William Fulbright. The president rarely leaves Washington without him. He was instantly defended by Mr Clinton, who said: "I am confident he didn't do anything wrong." Asked if he still had complete faith in him, he replied: "Absolutely."

Mr Starr named Mr Lindsey as a participant in an alleged plot involving one of the South's more colourful political characters, Herby "Boss Hogg" Branscum, a banker in Perryville, Arkansas, who pleads not guilty with a partner to funnelling money illegally into the Clinton campaign. The prosecutor has struck a deal with a bank president, Neil Ainley, to tell what he knows about Mr Lindsey - who was campaign treasurer for Mr Clinton - in exchange for a lenient sentence for failing to report cash transfers.

Mr Lindsey has already told a grand jury that he called the bank in May 1990, several days before the election, saying he needed $30,000 in cash. The money was for a last-minute get-out-the-vote effort. He divided the money into $7,500 increments. Under federal law, banks are required to report cash transactions of more than $10,000.

Hillary Clinton might be involved in the keeping of more than 400 FBI background files in a vault at the White House

Mr Lindsey's lawyer said that the idea was to confuse political opponents, not the Internal Revenue Service. He knew that the bank hired temporary workers at weekends and wanted to minimise the likelihood that someone would tell newspapers that the campaign was cashing large cheques.

The move against Mr Lindsey has raised the stakes of the trial as Mr Clinton is having to give videotaped evidence. He will be questioned about claims of cash transfers in the election in exchange for giving Mr Branscum a plum job on the state highway commission. The case is expected to make many of Mr Clinton's supporters wince at the brazenness of political life in Arkansas.

Meanwhile, the chairman of a House of Representatives investigative committee said yesterday that Hillary Clinton might be involved in the keeping of more than 400 FBI background files in a vault at the White House. The White House claims that a request to the FBI for the files was a low-level bureaucratic error, but Republicans are seizing on it as a pre-election issue more understandable to most Americans than Whitewater.

Congressman William Clinger, chairman of the Government Oversight Committee, and usually noted as a moderate Republican, said that, while he had no direct proof yet, the First Lady "certainly had a great deal of interest" in issues connected to the affair. The committee is calling witnesses from previous administrations first in a build-up to the cross-examination of Craig Livingstone, who was hand-picked by Mrs Clinton to control White House security. He kept the FBI documents in a vault near his office.

It is suspected that the files were used in the sacking in May 1993 of Billy Ray Dale, the head of the White House travel office, an act in which Mrs Clinton was directly involved.