Prosecutors said the 62-year-old former Socialist finance minister and one-time presidential favourite had been released on 100,000 euros ($135,000) bail after the charges on "aggravated pimping as part of an organised gang".

Strauss-Kahn was called in by investigating magistrates in the northern French city of Lille two days earlier than expected and charged with an offence that could carry 20 years in prison if he is convicted.

"He firmly declares that he is not guilty of these acts and never had the least inkling that the women he met could have been prostitutes," said Richard Malka, one of Strauss-Kahn's counsel.

"Dominique Strauss-Kahn was placed under judicial control and was forbidden from contacting defendants, civil plaintiffs, witnesses and the press regarding the procedures," prosecutors said in a statement.

Strauss-Kahn's lawyers immediately said they would appeal the charge.

"It goes without saying that we will ask for the cancellation of this decision," said one of his lawyers, Henri Leclerc.

Strauss-Kahn "has never broken the law," Malka said. "Through this prosecution they are trying to create a new crime punishing clients of prostitution where the law does not provide for this."

He also suggested that Strauss-Kahn was being pursued because of his high profile and links to France's Socialist party in the midst of a heated campaign for France's April-May presidential election.

"As a result of behaviour that is purely his own business, Mr. Strauss-Kahn has found himself -- largely because of his fame -- thrown to the wolves, by coincidence less than a month before a major election," Malka said.

Strauss-Kahn's name came up as police were investigating a pimping operation that saw sex workers from brothels over the Belgian border being brought to France for orgies in high-class hotels in Lille and Paris.

Strauss-Kahn admits that he took part in some of these parties, one of which was said to involve women being flown to Washington to entertain him while he was still managing director of the International Monetary Fund.

But, through his lawyers, he has denied knowing the escorts were paid.

Using prostitutes is not illegal in France, but prosecutors are seeking proof that Strauss-Kahn was aware the parties were arranged by an organised pimping ring and paid for by other guests misusing company funds.

Several Lille-based businessmen and policemen have been accused of taking part in the ring. Strauss-Kahn told police he did not suspect the women were prostitutes because he was introduced to them by senior police officers.

Strauss-Kahn's lawyers will also be in court on Wednesday in New York for the first hearing in a civil case brought against him by Nafissatou Diallo, a hotel maid who alleges he sexually assaulted her.

Judge Douglas McKeon will be asked to rule on a motion by Strauss-Kahn's lawyers urging him to dismiss the case on the grounds that, at the time of the alleged attack in May last year, their client had diplomatic immunity.

McKeon has said he will give a written judgment on whether the case can go forward within a few weeks. If he accepts the motion, Strauss-Kahn's US legal woes may be over. If not, Diallo's case for damages will go forward.

These two cases are the most serious threats facing Strauss-Kahn after the dismissal of two earlier criminal investigations that were brought against him in the United States and in France after his spectacular fall from grace.

First, criminal charges relating to 32-year-old Diallo's complaint that Strauss-Kahn attacked her in his suite in a New York Sofitel hotel on May 15 were dropped after prosecutors came to doubt the reliability of her testimony.

After that case fell apart, Strauss-Kahn, who had resigned from his post at the IMF in Washington, returned to France, only to face an accusation from 32-year-old author Tristane Banon that he had tried to rape her in 2002.

French investigating magistrates questioned Strauss-Kahn and his accuser and concluded that, while there was prima facie evidence of a sexual assault, the alleged attack had occurred too long ago to be prosecuted.

Strauss-Kahn admits having a "sexual encounter" with Diallo during the nine minutes she spent in his suite, and told French police that he had tried to kiss Banon, but strenuously denies he used violence in either case.

Until the scandals erupted, Strauss-Kahn was considered the favourite to become the Socialist Party's presidential candidate and the frontrunner to defeat incumbent right-winger Nicolas Sarkozy in next month's election. (AFP)