Budapest - Protests against the Hungarian government turned violent last night as police used water cannon and tear gas on crowds demanding the resignation of prime minister Ferenc Gyurcsany after he admitted his government had lied repeatedly about the state of the economy.

The second day of protests had been peaceful until late last night when cars were set alight by protesters who marched to the nearby headquarters of state television, intent on airing their demands.

The crowds - dozens of mostly young men - stormed the building's main entrance and it was later reported that it had been damaged by fire. A stone memorial to the Soviet troops who drove the Nazis from Hungary at the end of the second world war was also vandalised.

President Laszlo Solyom said there was a "moral crisis" in Hungary and called on Mr Gyurcsany to recognise that he had jeopardised people's faith in democracy.

In a recording made in May and leaked on Sunday, Mr Gyurcsany told deputies of his Socialist party that they had "screwed up", adding: "It's obvious that we lied throughout the last year-and-a-half, two years. It was totally clear that what we are saying is not true."

Mr Gyurcsany also said that Hungary had managed to keep its economy afloat only thanks to "divine providence, the abundance of cash in the world economy and hundreds of tricks".

Leaders of other parliamentary groups Fidesz and the Christian Democratic People's party said Hungary's democracy was in an "unprecedented crisis" and that they would use all constitutional means available to oust Mr Gyurcsany.

On Sunday the prime minister said that his speech to party members after leading the government coalition to victory in April's elections was meant to warn them about the depth of the problems and the urgent need for reforms.

Before travelling to Russia for a meeting with President Vladimir Putin, Mr Gyurcsany reiterated yesterday on state television that he had no intention of resigning. The Socialist party leadership expressed its support for him.