China's biggest political crisis in decades took a dramatic turn with the removal of one of the Communist Party's biggest stars from his post and his wife's arrest on suspicion of murder.

Bo Xilai, the charismatic former party leader of Chongqing city, had been tipped for the very highest echelons of power in China until he was sacked from the post last month before being suspended from the Politburo on Tuesday.

The announcement that he had been removed from the powerful 25-member Politburo was followed by the shock revelation that his wife was being investigated over the murder of British businessmanNeil Heywood.

Gu Kailai and Zhang Xiaojun, a medical orderly at Bo's home, fell out with Heywood over "economic interests", the state news agencyXinhua reported.

Both are now under investigation for murder, while Bo Xilai is suspected of being involved in "serious discipline violations", Xinhua said. In China, that usually refers to corruption.

Analysts say the rare, public scandal has exposed deep rifts within the ruling party ahead of a once-in-a-decade leadership transition due to take place later this year.

The People's Daily newspaper, the mouthpiece of the Communist Party, on Wednesday said Bo had "seriously violated the party discipline, causing damage to the cause and the image of the party and state".

The Xinhua dispatches came late on Tuesday just before midnight, confirming China's biggest public party upheaval since a purge before the 1989 Tiananmen Square crackdown.

"It's a dramatic event. We normally don't get this kind of drama out of the Chinese leadership," said Patrick Chovanec, professor at Beijing's Tsinghua University.

"It's not just about corruption, it's a major leadership battle over who is going to lead the country."

Before his downfall, Bo had been tipped to become a member of the party's Standing Committee -- the apex of political power in China -- when seven of its nine members step down in the autumn.

His revival of "red" culture -- including sending officials to work in the countryside and pushing workers to sing revolutionary songs -- drew accolades from the traditionalist left of the party.

But the 62-year-old's high-profile campaign and brutal onslaught on allegedly corrupt businessmen and officials, coupled with his "princeling" status as the son of a hero of China's revolution, alienated many in the party.

Last month, China's Premier Wen Jiabao warned against a repeat of the Cultural Revolution, a decade of savage chaos launched by revolutionary leader Mao Zedong, in comments seen as a swipe at Bo's Maoist revival campaign.

"One party, two factions will remain. The princelings will still survive, they will continue to be a very, very important force. But Bo Xilai will be gone forever," said Cheng Li, senior fellow at the Brookings Institution in Washington.

"For other leaders, no matter what faction they belong to, when they see all these charges, no one will support Bo Xilai."

The former commerce minister's troubles started in February when Wang Lijun, his former police chief, fled to a US consulate and reportedly asked for asylum, although few other details were made available.

The mystery deepened when news emerged late last month that London had asked China to reinvestigate the death of Heywood in Chongqing in November, amid rumours it might have been linked to Bo's family.

Heywood had previously done consulting for a secretive intelligence firm reportedly set up and staffed by former members of British spy agency MI6, although he was not working for the company at the time of his death.

Bo's downfall appeared on the front pages of all the major Chinese newspapers on Wednesday and was the most talked-about subject on China's hugely popular weibos -- microblogs similar to Twitter.

Many web users lamented the "worrying" levels of corruption in Chinese politics, while others said the scandal showed China's leaders enjoyed too much power.

"Corruption exists at all levels. The Chinese system is worrying," posted one under the name Pingfandelouyi89.