Spokeswoman Kgalalelo Masibi said the investigation into the project would be conducted separately from the investigation into the development of Zuma's Nkandla residence.

"The Public Protector is investigating the matters separately," she said in an sms.

Afriforum said earlier on Wednesday that Madonsela would investigate the Umlalazi-Nkandla Smart Growth Centre project, which was dubbed "Zumaville".

The planned new town would be constructed 3km from Zuma's home in Nkandla, KwaZulu-Natal.

The government would reportedly direct more than R1 billion of taxpayers' money into the development, while a further R1 billion would be raised from the private sector.

The project was the brainchild of Masibambisane, a rural development organisation which Zuma chaired.

"It is clear that Zuma will derive great benefit from the project in his personal capacity," Afriforum chief executive Ernst Roets said in a statement.

He said the Public Prosecutor had been asked to probe the matter because the circumstances amounted to an abuse of power by Zuma.

"The president is wearing three hats," Roets said.

"He is the head of the executive authority of government, he is chairman of Masibambisane, the government's partner in this matter; and as a citizen with a personal interest in Nkandla, he is also a beneficiary in this matter."

On October 7 Madonsela confirmed she would investigate the development of Zuma's personal residence in Nkandla.

On October 5, Public Works Minister Thulas Nxesi said the upgrades at the residence were similar to those made at the homes of former presidents. He declined to disclose how much money had been spent on the security and other construction work.

Reports have estimated the cost of the work to be between R203 million and R238 million.