Austrian Chancellor Sebastian Kurz on Friday faced increasing calls to step down, including from his own government allies, two days after he was implicated in a corruption scandal.

Austria's Chancellor Sebastian Kurz during a news conference in Vienna on September 8. (File photo)

On Wednesday prosecutors raided several locations linked to Kurz's right-wing People's Party (OeVP) and announced that the 35-year-old and nine other individuals were under investigation over claims that government money was used in a corrupt deal to ensure positive media coverage.

The opposition has announced they will file a no-confidence motion against Kurz next Tuesday though whether it can succeed depends on the OeVP's junior coalition partner, the Greens, who have not yet said how they will vote.

But Greens leader and Vice Chancellor Werner Kogler said the "serious, dire accusations" have "cast doubt on the ability of the chancellor to act and carry out his office effectively".

"Now it's getting extraordinarily difficult" to continue to work with Kurz, he told reporters ahead of meeting opposition parties to discuss how they could ensure "stability".

If Tuesday's vote gets the required majority in parliament to succeed, it would be the second time Kurz -- who became the world's youngest democratically elected leader in 2017 -- is deposed.

In 2019, his coalition with the far-right Freedom Party (FPOe) collapsed after his ally became engulfed in a corruption scandal, but fresh elections once again saw Kurz's OeVP come out on top.

In the latest scandal, Kurz has denied any wrongdoing, saying the accusations against him were "baseless," and has so far ruled out stepping down.

Thousands demonstrated in front of the OeVP headquarters in downtown Vienna late Thursday, calling for Kurz's resignation while waving signs that read "Against corruption" and "Shame on you".

According to prosecutors, the core allegation is that between 2016 and 2018, finance ministry resources were used to finance "partially manipulated opinion polls that served an exclusively party political interest".

This correlates to the time period in which Kurz, already a government minister, took over the leadership of the OeVP and later that of the Alpine EU member at the helm of a coalition with the FPOe.

Prosecutors allege that payments were made to an unnamed media company -- widely understood to be the Oesterreich tabloid -- in return for publishing these surveys.

The OeVP-Green coalition -- a first at a national level -- entered office in January 2020 and has already been put under strain several times by the fallout from other corruption scandals and differences over questions such as refugee policy.