One of the Vatican's biggest scandals in decades appeared to be widening today with reports that an Italian cardinal may be part of a power struggle involving leaked documents, corruption and intrigue — a suggestion the Vatican quickly denied.

Meanwhile, the pope's butler — arrested for allegedly having confidential documents in his home — agreed to co-operate with investigators, his lawyer said Monday.

Leading Italian newspapers Corriere della Sera and Il Messaggero reported Monday that Paolo Gabriele — arrested three days ago for allegedly feeding documents to Italian journalists — clearly did not act alone, and that an unidentified cardinal is suspected of playing a major role in the scandal.

The Vatican denied any cardinals were involved and said Pope Benedict XVI was following the case "intently, but with tranquility."

Vatican spokesman Rev. Federico Lombardi denied that a cardinal might be the next target of the "Vatileaks" probe. He said many Vatican officials were being questioned in the investigation but insisted: "There is no cardinal under suspicion."

The probe is actually working on two separate tracks: Vatican magistrates are pursuing the criminal investigation, and Gabriele was arrested as part of that. Separately, Pope Benedict XVI appointed three cardinals to form an investigative commission to look beyond the narrow criminal scope of the leaks.

Those cardinals have the authority to interview broadly across the Vatican bureaucracy, Lombardi said, and can both share information with Vatican prosecutors and receive information from them.

They report directly to the pope, who is being kept informed of the investigation, Lombardi said

The Vatican's probe yielded its first target with the arrest of the butler, who reportedly kept a treasure trove of documents in his Vatican apartment.

The butler was questioned Sunday night and has begun to talk, correspondent Sabina Castelfranco told CBC News. Others have also been interviewed by investigators.

Gabriele's lawyer Carlo Fusco said his client would "respond to all the questions and will collaborate with investigators to ascertain the truth."

The Vatican investigation is in full swing, as the belief is there are a number of other individuals involved in leaking the documents, including a married Italian woman who works at the Vatican and travelled with the Pope to Mexico and Cuba, Castelfranco said.

The detention of the butler, one of Pope Benedict XVI's household staff, threw the Holy See into chaos.

The 46-year-old father of three was always considered extremely loyal to Benedict and his predecessor, John Paul II, for whom he briefly served. Vatican insiders said they were baffled by his alleged involvement.

Over the past months, sensitive and secret Vatican documents were leaked to newspapers and a journalist who wrote and published some of these in a book.

The information in these papers concerned the management of the Vatican bank as well as the Pope's private correspondence.

"There's no question that plenty of Italian commentators and Vatican watchers say that it's very unlikely that Gabriele could have acted alone," Castelfranco reported. "And some have speculated that he may have been a pawn in a larger internal power struggle at the Vatican."

Pope addresses marchers

Benedict has not commented directly on the scandal. On Sunday, however, during his weekly public appearance at his apartment window, he said we are living in a "new babel."

Benedict also addressed participants in a march to St. Peter's Square on Sunday who demanded information on Emanuela Orlandi, the daughter of a Vatican messenger who disappeared in 1983 at age 15.

Various theories have surrounded her disappearance, linking her kidnapping to an attempt to free the Turkish gunman who shot John Paul in 1981, or to alleged Vatican financial dealings with a Rome criminal gang.

According to Vatican observers, there is an internal power struggle in the Vatican, and the targets of the leaks were Cardinal Tarcisio Bertone, secretary of state, Monsignor Georg Gaenswein, the Pope's personal assistant, and Pope Benedict himself.

Addressing the faithful in Saint Peter's Square on Sunday, the Pope said: "The wind is shaking the house of God, but it is not collapsing."