Turkish prosecutors have begun charging some of Prime Minister Recep Tayyip Erdogan's closest allies in a huge graft scandal he has responded to with a spectacular purge of the police.

Erdogan has said he is battling "a state within a state" and described the corruption probe, which comes ahead of crucial March polls, as a smear operation.

Media reports on Friday said prosecutors had begun handing out corruption indictments to some of the 89 suspects arrested three days earlier, with the first eight formally arrested and placed in pre-trial detention.

They are accused of numerous offences including accepting and facilitating bribes for development projects and securing construction permits for protected areas.

The remaining detainees were appearing in court Friday after being interrogated by police, according to local media.

The crisis erupted Tuesday when police made the arrests in a series of dawn raids, one of the most brazen challenges to Erdogan's 10-year rule.

Among the suspects detained were the sons of Interior Minister Muammer Guler, Economy Minister Zafer Caglayan and Environment Minister Erdogan Bayraktar, along with the chief executive of state-owned Halkbank, Suleyman Aslan, and construction tycoon Ali Agaoglu.

The environment minister's son has since been released, but the other two ministers' sons are still being held for questioning, the Dogan news agency reported.

The Hurriyet daily said 15 other suspects had also been released, but there was no official confirmation.

The crisis has rattled the stock market and sent the Turkish lira to an all-time low.

Since the scandal broke out, Erdogan has sacked dozens of police officials, including the Istanbul police chief, for cooperating with the investigation without permission.

Turkish media said another 17 were fired on Friday alone, amid a widening purge of the police command.

Erdogan's critics accuse him of desperately trying to protect his cronies, and the appointment of Selami Altinok, a little-known governor with no police career, as Istanbul's new police chief was further seen as an attempt to shut down the investigation.

Altinok raised eyebrows when he landed in Istanbul on Thursday in the premier's private jet.

'Turkey needs clean politics'

Kemal Kilicdaroglu, the leader of main opposition Republican People's Party (CHP), called Erdogan a "dictator".

"In this country, everything is controlled by what comes out of a dictator's mouth.... They want to drag the country into the darkness of 19th century," Kilicdaroglu said.

"Turkey needs clean politics and a clean society."

Deputy Prime Minister Bulent Arinc, speaking at the close of a parliamentary budget debate Friday, argued the government was the victim of a conspiracy.

"We don't deserve this. Who else has waged such a determined fight against corruption?" he said to opposition heckling.

The prime minister and his allies did not say who they thought was behind what Arinc called a "lynch campaign" against them. But most observers have interpreted the raids as a result of tensions between Erdogan's government and Fethullah Gulen, a Muslim cleric who wields considerable political and economic clout.

Gulen, who lives in self-imposed exiled in the US state of Pennsylvania, has had an increasingly public feud with Erdogan and his allies in the moderately Islamist ruling AKP party.

The graft probe has also exposed bitter fault lines in Erdogan's traditional power base and prompted calls from both his own party and opposition parties for the resignation of the entire government.

"No one has the right to intervene in the judicial process," wrote former culture minister Ertugrul Gunay on Twitter.

The European Union, which Turkey aspires to join, on Thursday urged Turkish authorities to investigate the graft allegations in an "impartial manner".

EU Affairs Minister Egemen Bagis branded the probe a "disgusting conspiracy".

The Erdogan government's allegation of a plot against it echoes its reaction to mass protests that shook the country in June, when a police crackdown on a peaceful sit-in against plans to raze an Istanbul park sparked huge demonstrations against the prime minister and his party.

At least six people died and 8,000 were hurt in three weeks of protests.