France's financial prosecutor announced on Thursday that an investigation into fake work allegations surrounding presidential candidate François Fillon would remain open, in a new blow to the ex-prime minister's campaign.

A three week-old scandal over hundreds of thousands of euros in taxpayers' money which his wife Penelope was paid for work she may not have done has cost conservative Fillon his status as favourite to win the French presidency in May.

"It is my duty to affirm that the numerous elements collected [by investigators] do not, at this stage, permit the case to be dropped," prosecutor Eliane Houlette said in a statement, after receiving an initial police report on the subject.

The prosecutor did not announce any further steps, but among the choices before it are dropping the case, taking it further by appointing an investigating magistrate, or sending it straight to trial.

Fillon, 62, has said he would step down should he be put under formal investigation, but his camp has also challenged the legitimacy of the probe. The first round of the election is less than 10 weeks away.

The favourite to win has now become centrist Emmanuel Macron, but by a very narrow margin over Fillon, who represents The Republicans.

Far-right National Front leader Marine Le Pen is seen by opinion polls winning the April 23 first round, but losing to either man in a May 7 run-off of the two top scoring first-round candidates.