Raja, who maintains his innocence, was formally arrested by officers from the Central Bureau of Investigation on Wednesday as part of a probe into the graft-tainted sale of second-generation (2G) telecom licences in 2008.

Police are expected to ask the court in central New Delhi to grant them the right to keep Raja -- and two other senior officials arrested with him -- in custody to enable further interrogation.

Raja, a low-caste politician from a regional party in south India, was forced out of government in November as public outrage mounted over the 2008 sale of the licences at knock-down prices.

The licences were sold on a first-come, first-served basis instead of via an auction and the ministry is suspected of changing the rules to favour certain companies, many of which were ineligible to bid.

A study by the auditor, the Comptroller and Auditor General, found that losses from the cut-price sales could have cost the national treasury up to $40 billion, though this figure is disputed by the government.

It is rare for a senior political figure who left the government just 10 weeks ago to be arrested and the move reflects the pressure on the government to act in a case that has been front-page news for months.

The so-called 2G scandal has engulfed India's Congress Party-led coalition government and Prime Minister Manmohan Singh, causing some of the strongest political headwinds since they came to power six years ago.