Taiwan`s former president Chen Shui-bian was released from hospital and returned to a detention centre Wednesday, on the second week of a hunger strike to protest his arrest on graft allegations.

Chen left the hospital by ambulance while dozens of supporters gathered and honked air horns as he was driven back to the detention centre.

Doctors said earlier Wednesday that Chen`s condition had visibly improved although he was still refusing to eat.

Chen was rushed to hospital on Sunday suffering from dehydration, four days after going on hunger strike in protest at what he says are politically-motivated allegations by the new government against him.

Chen, whose pro-independence stance in office set him against Beijing, has repeatedly accused the island`s China-friendly government of being behind the allegations of embezzlement, money laundering, taking bribes and forgery.

Chen also denied fresh accusations that he had embezzled funds intended to promote the island while he was in office.

The island`s Next magazine said prosecutors were looking into whether Chen and his former right-hand man Chiou I-jen had pocketed 25 million US dollars in diplomatic funds.

Chen`s office issued a statement dismissing the allegations as `a malicious attempt to confuse public opinion` and to `smear the former government`s diplomatic effort.`

Prosecutors meanwhile questioned Chen`s wife Wu Shu-chen for the second time in less than a week for her alleged role in the corruption cases.

`My husband`s detention is political persecution. I demand his release and the court directly hear the case,` Wu said in a statement read by her lawyer to reporters after the interrogation.

`I am not a civil servant. I have no right to use government funds and I didn`t use any. I am innocent,` she said.

Wu stands accused of money laundering, having previously been indicted for graft and forgery over the alleged embezzlement of around 15 million Taiwan dollars (about 450,000 US) during Chen`s term.

The former president is also implicated in the case.

The ex-leader has admitted submitting falsified expense forms to claim state funds but said the money was used for `secret diplomatic missions,` not for his personal benefit.

Chen has also admitted his wife wired 20 million US dollars abroad from past campaign funds but has denied laundering money.

He is the first former Taiwanese leader to be arrested, and could be held for up to four months before prosecutors have to charge him.

Chen`s lawyer has lodged an appeal with the Taipei District Court against the former president`s detention.

His office is planning to stage a mass night rally in Taipei on Saturday in a show of support.

Chen, who stepped down earlier this year after eight years, still has a large following despite a string of scandals implicating him, his family and former top officials from his administration.