During an appearance on Fox News Channel's Hannity, Giuliani said the money had been "funnelled ... through the law firm and the president repaid it."

Asked if Trump knew about the arrangement, the former mayor of New York said: "He didn't know about the specifics of it, as far as I know. But he did know about the general arrangement, that Michael would take care of things like this, like I take care of things like this for my clients. I don't burden them with every single thing that comes along. These are busy people."

Trump told reporters several weeks ago that he didn't know about the $US130,000 payment to Daniels as part of a non-disclosure agreement she signed days before the 2016 presidential election.

Asked aboard Air Force One whether he knew about the payment, Trump said flatly: "No." Trump also said he didn't know why Cohen had made the payment or where he got the money.

Giuliani, who joined Trump's legal team last month, said the president had repaid Cohen over several months, indicating the payments continued through at least the presidential transition, if not into his presidency.

He also said the payment "is going to turn out to be perfectly legal" because "that money was not campaign money."

Daniels has said she had a sexual encounter with Trump in 2006 and was paid to keep quiet as part of a non-disclosure agreement she is now seeking to invalidate. She has also filed a defamation suit against Trump, who denies having sex with Daniels.

Daniels' lawyer, Michael Avenatti, called the Guiliani comment "a stunning revelation."

"Mr Trump evidently has participated in a felony and there must be serious consequences for his conduct and his lies and deception to the American people," he said.

Cohen's payment to the president's accuser in the weeks leading up to the presidential election could be cast as an illegal contribution but not if he were acting on the president's behest and with his money.

Australian Associated Press