NEW DELHI, Monday 22 November 2010 (AFP) - India's ruling party sought on Monday to defuse a giant telecom corruption scandal that has embroiled the government, stalled parliament and further tarnished the country's political class.

For more than a week, the government of Prime Minister Manmohan Singh has been battling opposition pressure and lurid allegations about what could amount to one of the biggest scams in Indian history.

Former telecom minister A. Raja, who resigned on November 14, is accused of losing the national treasury up to 40 billion dollars over the sale of 2G mobile phone licences in 2007 for a fraction of their value.

The opposition led by the Bharatiya Janata Party (BJP) again blocked the functioning of parliament on Monday, continuing its demand that a cross-party probe be set up to investigate the alleged scam.

After the adjournment -- for a seventh day -- Finance Minister Pranab Mukherjee called an all-party meeting to seek an end to the disruption that has prevented any new legislation being discussed in the winter session.

"The purpose of the meeting is obviously to see if we can find a way out of the impasse in parliament," Congress spokesman Manish Tewari told AFP.

Elsewhere, India's Supreme Court raised doubts Monday about the recent appointment of a new top anti-corruption official, adding to a damaging perception that the government is soft on graft.

P.J. Thomas was sworn in as the new Central Vigilance Commissioner in September amid protests from the BJP who claimed at the time that he was a tainted figure.

During a legal challenge to Thomas's appointment, Chief Justice S.H. Kapadia questioned the nomination of a man who was charged by police over his role in an alleged palm oil import scam in his home state of Kerala.

"In every matter he deals with, he will face embarrassment and under these circumstances we want to know if he will be able to function as CVC," Kapadia told the court.

Police charged Thomas in 2000 over his role in allegedly fraudulent imports of palm oil from Malaysia while he worked as a senior civil servant in the Kerala state government in the 1990s. He has not been prosecuted.

Thomas was also a senior figure in the telecom ministry at the time of the tainted licence sales.

In a separate but unwelcome reminder of another corruption scandal, Indian police on Sunday arrested the sacked treasurer of the Delhi Commonwealth Games organising committee.

The vastly over-budget Commonwealth Games, which took place in in October, were widely criticised after a CVC probe and a host of media reports revealed suspect contracts and substandard public works.

The Games were overseen by a senior Congress figure, Suresh Kalmadi, who has since been stripped of his party role.

The Congress party was also roiled by the resignation of the chief minister of the powerful western state of Maharashtra, who stepped down two weeks ago over his alleged role in a housing scam that saw apartments reserved for war widows sold to politicians and military officers.

Faced with a daily drip feed of damaging stories, Congress party chief Sonia Gandhi said last week that India’s fast economic growth was coming at the price of a "shrinking moral universe".

India fell three places to 87th in Transparency International's latest ranking of 178 nations by their perceived level of corruption, with the fall attributed to the Commonwealth Games fiasco.

Concern about corruption has been raised recently by senior public figures and leading businessmen.

The previous head of the anti-graft watchdog CVC left office in September with a damning assessment of Indians and their attitude to corruption.

Almost one-third of Indians were "utterly corrupt", Pratyush Sinha said, adding that the worst part of his "thankless job" was observing how corruption had increased as people became more materialistic.

Last week Ratan Tata, chairman of the giant Tata Group, disclosed that he had been asked for a bribe by a government official while considering establishing a domestic airline.

Almost one-third of the members elected to India's new national parliament last year were facing outstanding criminal charges ranging from trespass to murder, according to a study by the Association for Democratic Reforms (ADR).