Taiwanese prosecutors claim to have enough evidence against President Chen Shui-bian to charge him with corruption, but they cannot do so because he is protected by presidential immunity.
Prosecutors have filed charges against his wife, Wu Shu-chen, and three former presidential aides.
The BBC News website spoke to people across the country to get their reaction to the unfolding scandal.
VICTORIA WANG, 40, TAIPEI
Victoria Wang says support is slipping away from the president
I am not surprised by these developments. Chen Shui-bian has lost the pride of being president. He is losing supporters in the nation - even though it has not been proved that he is corrupt.
Taiwan is already very poor. We don't have real economic growth. People don't have jobs. Many have moved to mainland China because of a hard life.
I believe he and his wife have set a bad example to the nation. I believe it is a grave problem that he cannot be charged just because he is the president.
We have tried long and hard to get him to step down. People power has not been enough. The workings of the constitution do not allow it either. And now we have a president with these serious accusations levelled against him.
I have a feeling that the support among his traditional power base is slipping away.
I only have anecdotal evidence. It is generally said that the common man - in the form of the taxi drivers - all support Chen Shui-bian. Previously, in all my conversations with taxi-drivers I can say they fully supported his policies. Now they tell me that the economy is so bad that he should step down.
More and more people are coming to realise what he is like. Young middle-class people like myself are becoming aware of his tricks.
So we will continue to try every way to get him down.
THOMAS LIOU, 42, PROFESSOR, TAICHUNG
I'm neutral on the graft charges. Now that the prosecutor's office has finally said something about the charges, it means they must have something very concrete.
Thomas Liou doesn't think the president should step down
But I don't think this will destabilise society. I have enough confidence in Taiwan.
At first sight, this situation shows that Taiwan is really a very democratic society. We have worked hard to get to this point and we have to celebrate such achievements.
We have had a sitting president charged by all sectors of society and yet the country functions. It's almost a miracle, if you think about it.
I would say that most people don't realise what a "charge" means. You charge somebody because of the possibility of wrongdoing.
Such things cannot be decided by the mass media, by people like you and me. It has to be decided by the legal system. In fact, I'm very sceptical of our mass media. They don't report news but treat each news story as a drama.
We have to wait and see. I don't think the president should step down just because of these charges. I don't want to prejudge whether he is right or wrong.
The people who are against the president are not used to having a system and they are against him, personally. That is not healthy.
EDWARD YEN, CHANGHUA, RETIRED, 57
In the past I have voted for Chen Shui-bian. But I don't trust him any more. This time, he will have to step down. If he doesn't, there is going to be a very disturbing period of time in Taiwan.
Edward Yen has voted for Chen Shui-bian in the past
For 15 years we only had the pro-China KMT party ruling the island. So I voted for Chen Shui-bian. I wanted to see real change and reforms. But I have been disappointed. The reforms haven't come. I don't believe he is the right man to lead us into the future.
I hope he resigns tonight and the vice-president can take his place. That would be the best scenario. We have to think of the future of Taiwan.
I am absolutely in favour of independence for Taiwan. But I don't think Chen Shui-bian is strong enough as far as independence is concerned, especially now, with all these scandals behind him.
Whether Taiwan eventually wants independence or re-unification with the mainland is a decision for the public. No political party has the right to make the decision for us.
These are the debates we want to have here in Taiwan. This scandal is an obstruction.
JA-CHIU LIN, HOUSEWIFE, 35, TAIPEI
Ja Chiu Lin says the media has a vendetta against Chen Shui-bian
I am not surprised by this development. We live in a democratic society. I hope the case is judged by the due process of law. We just have to wait and see what the judge will say in future.
I am not so surprised at the involvement of Chen Shui-bian's family. Nothing has been proved, but it seems that human nature changes when it gets into positions of power. Nobody can guarantee how people will act.
But I don't want to see the president quit right now. If the law protects him as president, so be it. I hope that he can make his decision after the judges have reached their decision.
I think the media in Taiwan are not fair to Chen Shui-bian and to his DPP party. Most of the newspapers seem to hate him. I don't like that. Such newspapers are not supported by the Taiwanese people