Michael Cohen, the former fixer for Donald Trump, revealed before his "hush money" trial a covert scheme in which the former president authorised purportedly fraudulent documents in an Oval Office meeting.

On Tuesday, Mr. Cohen, the key witness for the prosecution in Trump's criminal trial in New York, informed the jurors that the former president had given him instructions to pay porn star Stormy Daniels in exchange for her silence on an alleged 2006 affair.

In October 2016, Mr. Cohen paid $130,000, which is essential to Trump's trial—the first for a former US president.

The leading Republican contender for president in 2024, Donald Trump, 77, has entered a not guilty plea and refutes having had sex with Ms. Daniels.

In testimony Mr Cohen recounted an Oval Office meeting with Mr Trump in February 2017 when the newly inaugurated president told him he would soon be receiving the first two instalments of a bonus package. 

That package, Mr Cohen claimed, included reimbursements for the Daniels payment.

Prosecutors say Mr Trump paid Mr Cohen back after the election by creating false records indicating they were for legal fees.

Those disguised reimbursements provide the basis for the 34 counts of falsifying business records that Mr Trump faces.

Prosecutor Susan Hoffinger walked Mr Cohen through a series of invoices and checks - some signed by Trump himself - that Cohen said were falsely marked as paying to retain him for legal services.

"There was no retainer agreement, was there?" Ms Hoffinger asked.

"No, ma'am," Mr Cohen replied.

Mr Cohen, 57, admitted lying repeatedly about the payments to Ms Daniels and another woman, telling journalists that Trump had no involvement and pressing Ms Daniels to issue a statement denying their encounter.

Asked how he knew Ms Daniels' statement was false, Mr Cohen told the court: "Because I helped him [a lawyer] craft it.”

In 2018, during a federal investigation into the Ms Daniels matter, FBI agents raided Mr Cohen's home. He said he called Trump in a panic.

“He said to me, 'Don't worry, I'm the president of the United States, there's nothing here, everything is going to be OK, stay tough, you're going to be OK’," he said.

During Mr Cohen’s testimony, Mr Trump occasionally exchanged notes with his lawyers before assuming his customary posture, leaning back with his eyes closed.

At one point, his mouth appeared to hang slack for a moment.

The former fixer-turned-witness pleaded guilty to federal crimes in 2018, including offences related to the Ms Daniels payment.

It comes after Mr Cohen testified on Monday about multiple episodes in which he said Trump approved payments to keep damaging sex-scandal stories out of the public eye to avoid damaging his campaign.

He testified that Trump was solely concerned about the impact Ms Daniels' story could have on his White House bid - and not, as Mr Trump's defence has suggested, about the effect on his wife and family. 

Under New York law, falsifying business records can be elevated from a misdemeanour to a felony if the crime helped conceal another offence. 

In the case, prosecutors have argued that the payment was effectively a secret contribution to his campaign, violating federal and state laws.

However, the Manhattan trial is considered less consequential than three other criminal prosecutions Mr Trump faces, all of which are mired in delays.

The other cases charge Mr Trump with trying to overturn his 2020 presidential defeat and mishandling classified documents after leaving office.

Mr Trump has pleaded not guilty to all three.