Gul's presidential immunity does not cover allegations which date back to the time before he took office, the court ruled. Turkish authorities must now re-examine the case against Gul, who is accused of falsifying documents in the 1990s for the Welfare Party, a predecessor his ruling AK Party.

"It is unthinkable that presidents not be protected by immunity when deputies are," government spokesman Cemil Cicek said in response to the court ruling.

The Welfare Party has been accused of embezzling public money and was outlawed in 1998. Former Prime Minister Necmettin Erbakan was found guilty five years ago for the same fraud case. Gul pardoned him last year.

Secularists unhappy with Gul

The case will now go to an appeals court. In the meantime, Gul will continue to serve as president.

"It doesn't look like Gul's future is at stake anywhere in the short term but the secularist opposition could try to use this to create noise and discredit the government," Wolfango Piccoli from Eurasia Group think-tank told Reuters news agency.

The court ruling is likely to increase animosity between Turkish secularists and the Islamist-rooted government. The secularist establishment includes many army generals, judges and academics.

Many secularists accuse the AKP of seeking to replace Turkey's secular legal system with a regime based on Sharia, or Koranic law. The AKP has denied these accusations, saying that while it has religious roots, it is not Islamist.

The AK Party has pointed to political and economic reforms it has undertaken aimed at bringing Turkey into the European Union.

th/AFP/Reuters

Editor: Nick Amies