The alleged involvement of presidential chief of staff, Dilma Rousseff, underlines the growing risks posed by the several months old corruption scandal for Lula's hopes of getting her elected as the Workers' Party candidate in October next year.
The president's support for embattled Senate chief José Sarney has raised criticism that he is turning a blind eye to graft in exchange for support from Sarney's party for Rousseff's bid.
Vieira, the former senior tax official said in an interview with O Estado de São Paulo newspaper that Rousseff asked her to "speed" the probe of a son of Sarney, who has been indicted for nepotism, embezzlement and overseeing a secret scheme of perks and pay for staffers and relatives.
Ms Vieira says Rousseff had clearly meant her to close the investigation into Sarney's family in the meeting that she said took place at the end of last year.
"I was there at the invitation of the minister," she told O Estado. "The secretary that was there saw it, and it was registered." However Rousseff has denied that the meeting took place.
President Lula supported Rousseff and discarded the alleged meeting of the cabinet chief with the former head of the tax office. He implied Ms Vieira was not saying the truth, "it sounds too simple that a former secretary" should command the agenda of the meeting with Ms. Rousseff.
Vieira left her job last month, with media reporting she had been asked to quit after her agency launched a probe into alleged accounting irregularities by oil firm Petrobras without the Finance minister's approval.
Sarney's conservative Brazilian Democratic Movement Party (PMDB), Brazil's biggest, guarantees Lula's narrow majority in the Senate and would play a crucial role in helping elect Rousseff, who lacks the president's high approval ratings and is trailing in early opinion polls.
The scandal has already delayed crucial reforms, opened a rift between the Workers' Party Congress members and the PMDB, and is likely to favor São Paulo state Governor José Serra, the most certain presidential candidate of the centrist opposition PSDB party, who heads opinion polls.
But in spite of the corruption allegations involving presidential allies or close advisors, Lula's image and public opinion support remain at a solid record.
The allegations against Rousseff give the opposition a chance to keep the pressure on the government – it has called Vieira to testify next week at a Senate commission.
"I think it's dangerous for Dilma, it has the potential to become a big problem," said João Pedro Ribeiro, a political analyst at Tendências consultancy in São Paulo.
"The opposition has the ability to make this drag for a while just when Dilma is looking ahead to the electoral race next year," he added.
Senator Pedro Simon said that the Upper House has become "hell" given the repeated claims of corruption against his peer Sarney, whom he asked to "resign with dignity" and prevent the situation from worsening and further tarnishing the reputation of the Brazilian legislative branch.
Mercopress