This surprise move comes after Friedrich reportedly admitted to lying about the origins of money deposited in Luxembourg bank accounts last year. However, the Swiss ambassador has repeatedly denied allegations of money laundering.

A spokesman for the Swiss Federal Prosecutor's Office, Hansjurg Mark Wiedmer, commenting at the time of the ambassador's arrest, said Friederich had made deposits worth 1.25 million Swiss francs (US$750,000) into bank accounts in Luxembourg during the second half of 2001.

He also said that Friederich had falsified the documents relating to the deposits- a charge that the diplomat has allegedly admitted- claiming the money had come from the sale of private goods to an acquaintance.

Speaking to the Swissinfo news service at the weekend, Carlos Zeyen, Luxembourg's Deputy Prosecutor explained that: 'We cannot launch legal proceedings against a diplomat,' although he revealed that: 'The investigation could be relaunched if the Swiss make such a request'.

According to Swissinfo, Switzerland's Federal Prosecutor subsequently requested that Friederich's detention be extended.

The Swiss ambassador's lawyer, Jean Rene Mermoud has announced that he plans to appeal against any extension of his client's imprisonment, arguing that Friederich was the 'fall guy' in a plot hatched by 'secret services and political schemers' to preserve Luxembourg's reputation.

Mermoud alleges that the money laundering investigation launched into the financial affairs of his client was an attempt to divert attention away from Clearstream, the Luxembourg-based financial clearinghouse which was last year accused of hiding illegal transactions.