A British man questioned by detectives investigating the disappearance of Madeleine McCann is being formally treated as a suspect, Portuguese police said today.

Robert Murat, who had been acting as a translator for police in the search for the missing 4-year-old, had been released with restrictions imposed on his movements.

He is the first person named as a formal suspect in the 12-day inquiry but at a press conference this evening Portuguese police said they did not have enough evidence to arrest him.

Chief Inspector Olegario Sousa, who is leading the investigation, confirmed the scope of the inquiry had narrowed.

“Further to investigations on Madeleine McCann’s disappearance we are to inform that efforts have been focused on some lines of investigation which show a higher consistency,” Mr Sousa said.

“During the information collection last weekend one of those lines under investigation achieved strength and consistency.”

Mr Murat, 33, was taken for questioning at Portimao police station yesterday along with a German woman, Michaela Walczuch, believed to be his girlfriend, and a Portuguese man, Luis Antonio, thought to be her husband. Police have said that Ms Walczuch and Mr Antonio are only considered to be “witnesses”.

Police yesterday searched Mr Murat’s villa and Mr Sousa confirmed that a British man has now been classed as an “arguido” or formal suspect. Under Portuguese law he must report to police every five days and cannot leave the country. Police must obtain a court order if they decide to arrest him.

"There was not sufficient material to charge this suspect. When we work we work to get results, but this does not always happen at once," Mr Sousa said.

Sally Eveleigh, Mr Murat's cousin, who lives near Praia da Luz, says she has spoken to him since he was questioned. He told her he was devastated by the police investigation into him.

“Robert is shattered by this. He feels his life has been ruined forever. He feels he entered in the search for Madeleine to try to help and now police have turned against him,” she said.

"He offered his help as a translator to police and Madeleine's parents through pure goodwill. Now this has all been turned against him and he is devastated. He cannot believe the situation he is now in."

Police searched the Praia da Luz home that Mr Murat, shares with his mother Jenny, 71, until late last night. The villa is 150 yards from the holiday apartment where the McCann family had been staying and from which Madeleine was snatched.

A computer and mobile phone records were taken away during the search but Mrs Murat today denied reports that the villa's swimming pool had been drained.

Mr Murat had joined the searched for Madeleine on the night she went missing and had been closely involved with the investigation ever since. He told friends that he was working as a translator between Madeleine's parents, Kate and Gerry, and the police.

Mr Murat had lived with in Portugal with his wife, Dawn, and their daughter who, like Madeleine, is four-years-old and has blonde hair.

Gareth Bailey, a friend and former colleague of Mr Murat, said the marriage had broken down when Dawn became homesick and returned to the UK after four months on the Iberian peninsula.

“He was upset about being away from his daughter. She is his first child and she means a lot to him. When she was born, it was the best thing ever for him,” he said.

He became known to British reporters covering Madeleine’s disappearance and helped them with translation and local information. He told reporters that he was deeply concerned about the case because he had recently lost a case involving his daughter’s right to live with him.

On Monday last week detectives in both Portugal and Britain were alerted to concerns about Mr Murat’s behaviour by Lori Campbell, a journalist who works for the Sunday Mirror.

She said: “He was acting very strangely. I found him to be creepy. When he was talking to me he was vague about his background. He was coming in and out of the family apartment speaking with the media and acting like he was somebody official.”

When a photographer took Mr Murat’s photograph, he became nervous and asked her to delete the picture, she said.

Mr Murat’s uncle Ralph Eveleigh, who runs the Salsa Lita bed and breakfast in the village of Burgau, near Praia da Luz, said his nephew had nothing to do with Madeleine’s abduction.

“Robert is so sweet and good-natured. I know he can never have been involved in Madeleine’s abduction because he is so good-natured. He would not be involved in something like this,” he said.

“He was just trying to help. He put himself out there because this happened and he wanted to help out, which was why he was working as a translator to help the police and the media because he spoke fluent Portuguese. Jenny has told me he was eating dinner with her that night and she wouldn’t lie so he can’t be involved. It’s ridiculous to blame him.”

Mr Murat, who described himself as a property developer, has been staying at the villa with his mother, who has lived at the property for about 40 years. The house has an uninterrupted view of the flat from which Madeleine disappeared.

Mr Murat has recently been in Britain visiting his former wife, Dawn, and their daughter in Hockering, Norfolk. Mrs Murat last night refused to comment at the home that she used to share with him. At about 10pm she was taken from the house by police in an unmarked car. It is believed that she was with her daughter.

Geoffrey Livock, 71, who lives in Hockering, said Mr Murat’s daughter looks extremely similar to Madeleine: “At first glance if you saw them walking down the street you would think they were twins. Their hair is about the same and their faces are similar. I didn’t think anything about it when Madeleine went missing. It was only when all this came out that I realised they were so similar.”

Mr Murat had lived on the Algarve with his English mother and Portuguese father until he moved to England when he was in his late teens. He lost an eye in a motorbike accident as a teenager when he crashed into the wall of a railway station.

He worked for the turkey tycoon, Bernard Matthews, at the company factory in Lenwade, Norfolk, between 1994 and 2000. He then went on to become a successful car salesman with Inchcape for four years before moving on to work at Desira car dealership in Norwich, selling Nissans, Alfa Romeos, Fiats and Citroens.

Gaynor de Jesus, who went to school with Mr Murat, said: “He said he was an official translator for the police. He has a very easy way of coming across with them [the police] like he has known them all his life. He was quite easy-going. All witness accounts, everything that’s been coming into them, he has had first-hand information.

Hundreds of apartments have been searched during the past 11 days. The search of a property of someone closely connected with the police investigation will raise concerns about why police did not act sooner on information from a British journalist.

David Shelton, who coordinated the public search teams, said last night: “Robert was there on the first day helping with the police. He later told me he had signed a declaration of secrecy and could not talk about his work. I didn’t really know him before but he seemed like a nice normal guy.”

Mrs Murat insisted last night that her son had not done anything wrong. “I have been told not to say anything,” she said. “I insist the police issue a formal statement when all this is over to clear his name.”