Garcia's first term as president of Peru left the country in economic ruin [AFP]

Garcia has been facing calls from opposition leaders to sack cabinet members after audio tapes emerged linking some of them to a plan to award oil contracts in exchange for bribes.

Jorge del Castillo, the Peruvian prime minister - one of those named during conversations caught on the tapes - has denied any wrong-doing.

Leaving congress on Thursday with the rest of the cabinet, Del Castillo said: "We are going to the presidential palace to offer our posts to the president so he can decide."

Investigation launched

Juan Valdivia, the former mines and energy minister, and two energy officials have already been forced to step down.

The congress has voted to investigate all oil and gas concessions granted since 2006.

It will also examine for irregularities contracts signed with foreign oil companies.

Garcia first served as Peru's president in 1985, leaving the country in economic ruin by the end of his term.

He was elected again in 2006 after championing free-markets and foreign investment.

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