Mr Clinton was called as a defence witness by James and Susan McDougal, on trial for bank fraud and conspiracy. The president, who is not accused of any wrongdoing, was subpoenaed to appear to dispute allegations that, as governor of Arkansas, he sought an illegal loan for Susan McDougal. In the past, Mr Clinton has called the assertions "a bunch of bull".

The McDougals, Mr Clinton and his wife, Hillary, were partners in the Whitewater property venture in the late 1970s. Although their investment lost money, questions have arisen about whether funds for the project were siphoned off from a savings and loan institution also owned by the McDougals.

The president was said to be eager to do all he could "to set the record straight"

District Court Judge George Howard, who is trying the case in Little Rock, Arkansas, agreed to allow Mr Clinton to testify electronically rather than appear in person. His decision follows a precedent set by previous presidents, including Gerald Ford, Jimmy Carter and Ronald Reagan.

The judge presided over the proceedings from Little Rock through a video-conferencing hook-up scrambled to prevent electronic eavesdropping. He ordered all participants not to talk about Mr Clinton's testimony until after it was presented in court.

The president was examined in the Map Room on the ground floor of the White House where President Roosevelt received briefings on the progress of the Second World War.

The McDougals, now divorced and no longer friends of the Clintons, were present for the testimony, their first visit to the White House since Mr Clinton was elected in 1992. The session also included lawyers for the McDougals, White House attorneys, the president's personal lawyer, David Kendall, a representative from the independent counsel's office investigating the Whitewater affair and a Justice Department official.

The president, who is a lawyer himself and unlikely to be ruffled by questioning and cross-examination, was said to be eager to do all he could "to set the record straight".

Reagan's testimony in the Iran-Contra trial was eventually released

A larger problem facing Mr Clinton and his advisers is the ultimate disposition of the tape. If the White House fights to keep it out of public circulation, it runs the risk of being criticised for trying to suppress the facts. But the alternative is fairly unpalatable. In acquiescing to its release, the White House would expose the president to the risk of embarrassment from its use by Republican foes and television satirists in an election year.

In the past, judges have imposed some restrictions on the use of taped presidential testimony. Videotapes of Mr Ford testifying in the trail of would-be assassin Lynette "Squeaky" Fromme were not released, nor were tapes of Mr Carter giving evidence in a Georgia corruption case.

Mr Reagan's testimony in the Iran-Contra trial was eventually released. The White House is leaning towards keeping the videotape inside the court room and out of the hands of those who produce television commercials for Senator Robert Dole, the president's opponent in the November election.

Mr Clinton has said he does not object to making the tapes available to the public under certain conditions, but has stressed that they should not be abused.

"It should not be misused by those who would try to take political advantage of the president's appearance," said Michael McCurry, White House spokesman.

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