US chat show host David Letterman made an extraordinary confession to a string of affairs on his top-rated TV show after an alleged two million dollar blackmail plot.

A TV worker had threatened to expose the Late Show host's affairs in a book and screenplay unless he was paid hush money, the married presenter claimed.

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TV company CBS confirmed that an employee has been arrested over the alleged plot.

The 62-year-old presenter even went so far as to issue a fake two million dollar cheque during an investigation into the alleged plot and has given evidence to a grand jury.

Letterman left last night's studio audience baffled as he began relating his "bizarre experience", but laced his confession about his "creepy" affairs with gags.

His show's production company, Letterman, said he referred the matter to the Manhattan district attorney's office.

An investigation ended in the arrest and suspension of an employee of the TV show 48 Hours.

Letterman, who is married with a six-year-old son, began last night's broadcast of the Late Show by walking on stage and briefly leaning on a pillar with his back to the audience.

After a monologue with jokes about regular targets such as Dick Cheney and Sarah Palin, he sat behind his desk.

He said he was glad the audience was in a pleasant mood "because I have a little story that I'd like to tell you and the home viewers as well".

Three weeks ago, Letterman said he got in his car early in the morning and found a package with a letter saying: "I know that you do some terrible, terrible things and that I can prove you do some terrible things."

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He said the letter contained proof.

Letterman's lawyer set up a meeting with the man, who threatened to write a screenplay and a book unless he was paid off.

Two further meetings resulted in the fake cheque being delivered. Letterman said he testified to a grand jury yesterday.

"I was worried for myself, I was worried for my family," he said.

"I felt menaced by this and I had to tell them all of the creepy things that I had done."

He added: "The creepy stuff was that I have had sex with women who work for me on this show.

"My response to that is yes, I have. Would it be embarrassing if it were made public? Yes, it would, especially for the women.

"It's been a very bizarre experience," he said.

"I felt like I needed to protect these people. I need to protect my family. I need to protect myself. Hope to protect my job."

But Letterman also made light of the situation: "I know what you're saying ... I'll be darned, Dave had sex."

He and long-time girlfriend Regina Lasko married in March, although they had been together since 1986. Their son Harry was born in November 2003.

It is the second embarrassment for Letterman in recent months.

In June, he apologised to Sarah Palin for making a crude joke about the former Republican vice-presidential candidate's 14-year-old daughter.

Although there was a small "fire Letterman" demonstration outside his studio later, CBS stood by its late-night star.

After nearly 15 years in second place to NBC's Jay Leno in the ratings, Letterman took over the top spot this summer.

Letterman was the victim of a 2005 plot by a former painter on his Montana ranch to kidnap his nanny and son for a five million dollar ransom.