As Madeleine's parents are named as suspects, police ask Kate:

•Why was her blood in your car?
•Did you drug her that night?
•Confess and get just two years

Kate McCann fears she will now be charged over her daughter's death after Portuguese police accused her directly of killing Madeleine.

Police have now declared both Kate and Gerry McCann as formal suspects in the disappearance of the four-year-old.

Detectives alleged that Mrs McCann accidentally gave Madeleine a fatal overdose of sedatives.

They claimed she then engaged with her husband in a monumental cover-up.

It's emerged today that Mrs McCann had been offered a plea bargain deal - to confess in exchange for a 'light' sentence of perhaps, only two years.

In an angry confrontation which lasted more than four hours at police headquarters in Portimao, detectives finally demanded: 'Tell us what you've done with her.'

The 39-year-old GP was asked to explain traces of her daughter's blood allegedly found in the family's hired Renault Scenic car.

Police apparently believe Mrs McCann, rather than her husband Gerry, is their main suspect because of a 'scent of death' allegedly detected on her clothes by sniffer dogs trained to find a corpse.

Gerry did not say anything as he was caught in the flashlights of the waiting press photographers and journalists.

He looked nauseous and started straight ahead as his lawyer, Carlos Pinto de Abreu, read out a statement that said no charges had been brought and no bail conditions had been set.

The McCanns' spokesman David Hughes refused to say whether the McCanns would now be leaving Portugal.

However, friends of the couple said they were free to do so and could head home in the next few days as they had planned.

A friend revealed that the 39-year-old GP shook with rage and replied: "How dare you? How dare you use emotional blackmail to make me confess something I didn't do?"

Asked how her husband was taking this situation, the friend replied: "How do you think a red-blooded Scottish male would react when defending the honour of his wife?"

As she was speaking Mr McCann was in the police station facing similar questions. Mr Hughes said he did not know exactly what questions he had been asked but understood they were along the same lines as those posed to his wife.

Police apparently believe Mrs McCann, rather than her husband, is their main suspect because of a "scent of death" allegedly detected on her clothes by sniffer dogs trained to find a corpse.

She was named during the afternoon as an "arguida" or official suspect.

The McCanns have been under round-the-clock surveillance by Portuguese police for more than a month, it emerged.

The covert operation was launched after suspicions grew that they could be linked to the disappearance of their daughter.

Intimate conversations between the pair have been secretly listened to and their movements tracked by investigators.

A British source added: "After a slow start, the police inquiry is a lot more focused and professional.

"There is a great deal of co-operation between the Portuguese and British police. There are likely to be further dramatic developments in the next few days.

"A lot of people will be surprised by what else is going to come out."

Dozens of British detectives have been drafted into the inquiry in recent weeks. Sources said 55 officers were now working on the case.

It is believed they are carrying out urgent inquiries on behalf of the Portuguese police into the background of the McCanns.

Investigators want to learn more about the state of their marriage, their relationship and whether either of them are prone to losing their temper.

It can also be revealed that Portuguese police have been deliberately leaking details of their inquiry to local media as part of an investigative strategy to put more pressure on the McCanns in recent weeks.

It has never been established when Madeleine was last seen in public and it may even be the case that she was alone with her family from earlier than 5pm.

Madeleine was photographed at the poolside that day at 2.29pm but there is no evidence to suggest she was seen in public after that.

If a fatal accident had occurred some time that day, the McCanns could have had more than three hours to hide or move the body and to plan their actions.

Mrs McCann's transformation from victim to suspect came in a whirlwind 24 hours of drama.

There were chaotic scenes outside police headquarters in the town of Portimao, 30 miles from Praia da Luz, with the narrow cobbled pavement hopelessly inadequate for more than 200 photographers, camera crews and reporters - plus dozens of curious members of the public - who gathered to watch her arrive for her second day of questioning.

Police eventually closed off the road to traffic.

At 11.07am, Mrs McCann stepped out of a car driven by her spokesman Justine McGuinness, only ten hours after she had left the police station at 12.55am.

There were ugly scenes with booing and jeering from some Portuguese onlookers. But one British tourist shouted out: "We believe you Kate."

As with her first day of the interview on Wednesday, she had her lawyer Carlos Pinto de Abreu present.

The second day of Mrs McCann's interview, 128 days since Madeleine vanished from the family's holiday apartment in Praia da Luz, began with her being officially informed she was no longer a witness but a suspect.

Detectives then put 22 key questions to her.

She was directly asked: "Did you kill your daughter?" and was so taken aback she swore at detectives.

It is understood detectives had not asked her on Wednesday about the events of May 3, but they did tell her traces of Madeleine's blood had been found in the hire car.

At the second interview they launched a more aggressive line of questioning, accusing her of killing her daughter and then concocting an incredible smokescreen by pretending she was abducted.

They suggested she had moved her daughter's body in the boot of the family's hire car, and said police dogs had detected the smell of a corpse on her T-shirt and jeans and on Madeleine's favourite toy Cuddle Cat.

Mr McCann reported to the police station for his own questioning at 3.37pm, seven minutes after detectives finished with his wife.

She was freed and returned to the couple's rented villa in Praia da Luz, where she gave two-year-old twins Sean and Amelie an enormous hug. Later she called on the local Anglican priest for prayers.

The McCanns, who have remained in the Algarve over the summer with their twins, were on the verge of leaving Portugal to return to Rothley, Leicestershire, this weekend.

As arguidos, they could be taken before a judge for restrictions to be placed on their movements, they could be banned from leaving Portugal and even placed under house arrest.

Bewildered members of the McCanns' family in Britain exploded in fury, condemned the police investigation as a complete farce and called detectives "imbeciles".

Casting aside their usual diplomacy, they said police had botched the entire investigation.

They raised questions such as why, if police think Madeleine was accidentally given an overdose, there would be blood stains in the car, and how the McCanns were supposed to have moved a body when the eyes of the world were on them.

There was also scepticism that a dog could accurately detect the scent of a corpse after three months.

Gerry's sister Philomena McCann said: "We are furious, the utter incompetence of the investigation has led to this, and all the while the perpetrator of the crime is walking free and could possibly do this again.

"They were saying, 'Tell us what you did with her?' and Kate was like, 'You must be insane to think we'd put ourselves through this'."

She told ITV News: "They tried to get Kate to confess to having accidentally killed Madeleine by offering her a deal through her lawyer.

"It was, 'If you say you killed Madeleine by accident and hid her and then disposed of the body, we can guarantee you a two-year jail sentence or even less. You may even get off earlier because people feel sorry for you. It was an accident'."

• Two men stand to benefit directly from the Portuguese police decision to focus their inquiry on Kate and Gerry McCann.

One is Robert Murat, the British expat named as the only official suspect over Madeleine McCann's disappearance ten days after she vanished.

The other is publicist Max Clifford, who was last night preparing to market Murat's story to the world's media.

Murat, 33, a sometime estate agent who lives with his mother 100 yards from the McCanns' holiday apartment, fell under suspicion after he spent long hours with police and journalists investigating the Madeleine mystery.

He helped officers translate, and asked increasingly probing questions of reporters.

His home has been searched repeatedly, but nothing appears to have been found to connect him with the missing child.

From the start he has protested his innocence.

A spokesman for Max Clifford said the publicist was preparing to represent Murat to the media if Portuguese police declare his "arguido" status has been lifted.

She said it was not yet decided if he would be asking for money to tell his story.