Grenada's prime minister announced yesterday the government will open an independent investigation into bribery allegations that he vehemently denies.

A commission of enquiry will be formed by the island's governor general, Prime Minister Keith Mitchell told Parliament.

Mitchell has denied allegations reported by the Miami-based newsletter OffshoreAlert in April that he accepted a US$500,000 payoff from a German-born man in exchange for giving him a trade minister position.

Mitchell has filed a criminal libel lawsuit against OffshoreAlert and publisher David Marchant. Marchant has said he stands by the story.