* Financial prosecutor says no decision taken in the case
* Fillon says will step down if put under formal investigation
* Affair has cost him status as favourite for presidency
* Centrist Macron now seen as likely winner
* Fillon, campaigning in Reunion, says won't say more on subject (Updates with Fillon from Reunion)
By Matthias Blamont and Bernard Grollier
PARIS/SAINT DENIS DE LA REUNION, Feb 12 (Reuters) - France's financial prosecutor is likely to take further legal steps this week in its investigation into allegations of fake work by presidential candidate Francois Fillon's wife, a newspaper reported on Sunday.
The Journal de Dimanche (JDD) cited unidentified sources saying the proceedings - which would mean the prosecutor had decided against dropping the case for lack of evidence - would involve both Fillon and his British wife Penelope.
A spokeswoman for the prosecutor said no decision had been taken. "No decision has been made at this stage of the investigation and no timeframe has been agreed as of today," she said.
Fillon told supporters during a visit to the French Indian Ocean island of Reunion that he was determined to stay in the presidential campaign until the end.
"My friends, for a fortnight, I have been attacked 24 hours a day but I will fight until the end because my project is the only one capable of reviving France," he said.
The couple's lawyer did not respond to a request for comments. Fillon has confirmed that his wife was paid but has said the work was genuine.
His lawyers have questioned the legal legitimacy of the case and have asked the financial prosecutor to drop it.
Fillon, who has rallied his party behind him, is fighting to keep his campaign alive and has said he will step down if he is put under formal investigation.
Opinion polls since the scandal broke almost three weeks ago show him slipping out of the race, with voters turned off by the probe into a report by the Canard Enchaine satirical weekly that his wife was paid hundreds of thousands of euros in taxpayers' money for work she may not have done.
The polls, which before the affair saw him as favourite to win the presidency, show the 62-year-old former prime minister coming a close third in the first round vote on April 23. That would leave first- and second-placed Marine Le Pen of the National Front and centrist Emmanuel Macron to contest the May 7 second round, a runoff the polls show Macron winning comfortably.
FAMILY EARNINGS
According to the newspaper, there are two potential routes the prosecutor will take.
The first would be to refer the case to an investigating magistrate, whose role is to decide whether a person or people should be put under formal investigation.