Pope's butler held over 'Vatileaks'.

THE pope's butler has been arrested in its embarrassing leaks scandal, adding a Hollywood twist to an already remarkable tale of power struggles, intrigue and corruption in the highest levels of Catholic Church governance.

Paolo Gabriele, a layman who lives inside Vatican City, was arrested on Wednesday with secret documents in his possession and was being held today, the Vatican spokesman the Rev Federico Lombardi said in a statement.

Gabriele is often seen by the pope's side in public. Lombardi said Gabriele had two lawyers representing him as the Vatican judicial system takes its investigative course.

The "Vatileaks" scandal has seriously embarrassed the Vatican, at a time in which it is trying to show the world financial community that it has turned a page and shed its reputation as a scandal plagued tax haven.

Vatican documents leaked to the press in recent months have undermined that effort, alleging corruption in Vatican finance as well as internal bickering over the Holy See's efforts to show more transparency in its financial operations.

But perhaps most critically, the leaks have seemed aimed at one main goal: to discredit Pope Benedict XVI's number two, Cardinal Tarcisio Bertone, the Vatican secretary of state.