The longtime ally of US President George W. Bush was reported to be willing to resign as long as the bank took some of the blame for its advice on the controversial pay raise he negotiated for his companion.

 European countries have pushed hard for the former deputy defence secretary's departure from the 185-country bank and even White House support has waned in recent days as the controversy deepened.

 At issue is Wolfowitz's role in arranging a generous promotion and pay package for his companion and fellow bank employee, Shaha Riza, after he took the helm in 2005.

 A scathing report released by an internal investigatory panel this week found that Wolfowitz violated bank rules in arranging the deal for Riza, but also said the bank gave him cloudy instructions on the matter.

 A source close to the bank said Wednesday that a deal being considered would have the bank recognize that it could have given him better guidance on avoiding a conflict-of-interest situation.

 Wolfowitz's Washington lawyer, Robert Bennett, and World Bank officials were in teleconference negotiations that have reached a "critical" stage, CNBC television news reported.

 "Mr. Wolfowitz will not resign under this cloud and he will rather put this matter to a full vote," Bennett said Wednesday.

 The Bush administration had been resolutely backing Wolfowitz -- one of the key architects of the Iraq war -- despite persistent calls for him to resign during the month-old scandal.

 But that support began to crumble this week after an internal report found that Wolfowitz had breached the bank's ethics rules.

 "This has certainly been a bruising episode to the bank and what you have to do is to figure out a way forward to maintain the integrity of the institution, and therefore when you do it you discuss everything," Bush spokesman Tony Snow said Wednesday.

 At the State Department, spokesman Tom Casey said the bank "is bigger than any individuals, past, present or future."

 Wolfowitz has steered the bank for nearly two years. On Tuesday he pleaded with directors to let him stay on the job, in which he has made fighting corruption a priority.

 "I have said I am not without fault in the matter," Wolfowitz said of the scandal surrounding Riza, who ended up earning almost 200,000 dollars a year when she was transferred to the State Department, still on the World Bank's payroll.

 "I implore each of you to be fair in making your decision, because your decision will not only affect my life, it will affect how this institution is viewed in the United States and the world," he said.

 Wolfowitz acknowledged he had relied too heavily on outside advisers brought in when Bush nominated him to become bank president in June 2005, and pledged to change his management style "to regain the trust of the staff."

 A US official quoted by The Washington Post on Wednesday said that Washington and European countries were considering a deal under which Wolfowitz would resign after having been cleared of any wrongdoing.

 "The message to the board is 'don't fire him based on the personnel infraction.' Then if you want to have a bigger, broader conversation we'll engage in it," an administration official told the paper, speaking on condition of anonymity.

Agence France Presse