Tens of thousands of people rallied in an opposition-organised demonstration in Madrid accusing the government of Prime Minister Pedro Sanchez of corruption.

Protesters, many waving red and yellow Spanish flags, massed in the Plaza de Espana, a large square in the centre of the Spanish capital, and chanted "Perdo Sanchez, resign!".

The Popular Party (PP) called Sunday’s rally after leaked audio recordings allegedly documented a member of the Socialist party, Leire Diez, waging a smear campaign against a police unit that investigated graft allegations against Sanchez’s wife, brother, and his former right-hand man.

Diez has denied the allegations, telling reporters on Wednesday that she was conducting research for a book and was not working on behalf of the party or Sanchez. She also resigned from Sanchez's Socialist party.

PP leader Alberto Nunez Feijoo has accused the government of "mafia practices" over the affair, and said Sanchez is "at the centre" of multiple corruption scandals.

"This government has stained everything –– politics, state institutions, the separation of powers," he told the rally, going on to urge Sanchez to call early elections.

The PP estimated that more than 100,000 people attended the rally, held under the slogan "Mafia or Democracy."

The central government’s representative in Madrid put the turnout between 45,000 and 50,000.

Sanchez has dismissed the probes against members of his inner circle as part of a "smear campaign" carried out by the right wing to undermine his government.

He came to power in June 2018 after ousting his PP predecessor, Mariano Rajoy, in a no-confidence vote over a corruption scandal affecting involving the conservative party.

Recent polls show the PP holding only a slim lead over the Socialists. The next general election is expected in 2027.