By Richard Balmforth and Emmanuel Jarry
PARIS (Reuters) - French conservative presidential candidate Francois Fillon will fight back on Monday against the fake job scandal that threatens his campaign, a source close to him said.
"Counter-attack," the source said in a text message. Fillon "plans to tell the truth to the French people", when he speaks at his campaign headquarters at 4 pm (1500 GMT).
Fillon has come under pressure to quit the race since a newspaper, Le Canard enchaine, published a report on Jan. 25 alleging that his wife Penelope was paid hundreds of thousands of euros in state money for work she may never have done.
Ahead of Fillon's news conference, Le Monde newspaper said prosecutors were investigating whether there was a link between a Legion of Honour medal awarded to a wealthy businessman friend of Fillon and a sum of money that businessman paid to Penelope.
Opinion polls show the 62 year-old former prime minister has lost his status as favorite to win the presidency to independent centrist Emmanuel Macron, and that far-right leader Marine Le Pen has also gained ground.
With his campaign in turmoil, some senior members of Fillon's own The Republicans party have told him to stand aside for someone else in time to build a campaign for a vote that is now just 11 weeks away.
But Fillon said at the weekend he would fight to the end to defend his position as the party's nominee.
Alain Juppe, another former prime minister seen as a potential stand-in for Fillon, on Monday ruled out a comeback. "No is no," Juppe said in a tweet. "I'll say why. Today let's listen to FF (Fillon), our candidate."
Fillon's camp on Saturday distributed 3 million leaflets entitled "Stop the Manhunt", painting the scandal as a left-wing conspiracy and declaring: "Enough is enough".
A champion of free-market policies to reinvigorate France's heavily regulated economy, Fillon has seen his campaign unravel since Le Canard enchaine reported his wife Penelope had been paid as a parliamentary assistant for work she had not really done.
Seen two weeks ago as the comfortable favorite to win the keys to the Elysee palace, opinion polls now show Fillon failing to reach the May 7 runoff vote.
It has been a humiliating reversal of fortune for Fillon, a devout Catholic and father of five children, who had campaigned on the basis that he is a rare honest politician.
The accusations also sit uncomfortably with his economic plans for setting France back on to its feet include slashing public spending and sacking half a million public servants.
Since the scandal broke, he and his wife have been interviewed by the fraud police, his office in parliament has been searched, and the inquiry has been extended to two of his adult children he also paid for stints of work at the Senate.
If he were forced to quit as the center-right's nominee, it would be unprecedented in six decades of French politics.
Monday's Le Monde report said Fillon told investigators that his daughter had helped him research a book he wrote and that his son had been paid while helping with the 2007 campaign of former president Nicolas Sarkozy.
It also said investigators were probing the award of France's highest decoration, the Legion of Honour, to magnate Marc Ladreit de Lacharriere in 2010 while Fillon was prime minister.
Le Monde quoted Fillon's lawyer as saying there was no link between the medal award and payments the magnate made to Penelope Fillon in 2012 and 2013.
The stakes are high for France's Right, which had looked likely to return to power after five years of Socialist rule under President Francois Hollande.
Polls now show Fillon coming third in the April 23 first round, with first and second placed Le Pen and Macron going through to a run-off vote on May 7 - which the surveys show Macron would comfortably win.
Former investment banker Macron was economy minister in Hollande's government from 2014 until last year, but the 39 year-old has no established party apparatus, has never been elected, and held no government office before that.
Le Pen's anti-immigrant, anti-EU National Front presents an even more uncertain prospect for western governments and investors worried about a further destabilization of the world order after the Brexit vote in Britain and the election of Donald Trump in the United States.
Both campaigned on Sunday in the city of Lyon.
Le Pen, 48, told thousands of flag-waving supporters that she alone would protect them against Islamic fundamentalism and globalization if elected president.
Macron focused his attacks on the woman who is now his main rival - calling her policies a betrayal of French values of liberty, fraternity and equality.
(Additional reporting by Brian Love, Maya Nikolaeva, Ingrid Melander and Yann Le Guernigou; Writing by Andrew Callus; Editing by Janet Lawrence and Richard Lough)