CHARLOTTE, N.C. -- Federal prosecutors heading the grand jury investigation of PTL are asking witnesses questions apparently designed to determine whether ministry money was paid in exchange for sexual favors for Jim Bakker.

Jay Babcock, PTL's former director of creative television, said Tuesday he told the grand jury meeting in Charlotte that he has had sex with Bakker. He is the first to publicly acknowledge telling the grand jury of a homosexual encounter with Bakker.

{Bakker, meanwhile, flatly denied he has ever had a homosexual relationship with anyone, United Press International reported yesterday. "I'll tell you before God I've never had homosexual sex with anyone and certainly not with Jay Babcock," Bakker said. Last month, Bakker denied under oath that he had ever had a homosexual relationship.}

Babcock had told reporters Monday that he expected to be questioned by prosecutors about "whether I had sex with the boss."

Tuesday, after testifying much of the afternoon, Babcock was asked by a reporter, "What did you say regarding sex with Jim Bakker?"

His response: "I commented that yes, it happened -- a long time ago."

Babcock said prosecutors also wanted to know about the circumstances surrounding that sex. "I'm not willing to talk about those," he told reporters.

Babcock also told reporters that prosecutors asked him whether Bakker and his personal aide, David Taggart, had had a sexual relationship.

"I have no firsthand knowledge of that," Babcock said.

PTL records show that Taggart drew more than $620,000 from PTL in a 15-month period that ended March 1987 -- the same month Bakker resigned as PTL's president after acknowledging that he had a 1980 sexual encounter with Jessica Hahn and that money had been paid to silence her.

Bakker and his top aides are under investigation for possible mail, wire and tax fraud.

The grand jury probe, now in its second year, is focusing on how PTL raised and spent millions of dollars and whether Bakker and other ministry leaders violated federal laws by raising money through the mails or on television for one purpose and then spending it for another.

The allegations of homosexual activity at PTL aren't new.

Bakker was dismissed by the Assemblies of God in May 1987 for unbecoming conduct related to his sexual encounter with Hahn and because of "alleged misconduct involving bisexual activity."

In May 1987, the Rev. Jerry Falwell told reporters that Gary Smith, PTL's former general manager, was the target of one of Bakker's alleged homosexual advances.

Smith testified before the grand jury for about six hours Monday but refused to discuss what he said. He acknowledged, however, that the subject of homosexuality did come up.

John Wesley Fletcher, the evangelist who introduced Hahn to Bakker, testified for about three hours Tuesday. He also refused to tell reporters what happened inside the grand jury room.

Asked whether he had ever had a sexual relationship with Bakker, Fletcher replied: "No comment."

Fletcher's attorney, Allen Bailey of Charlotte, then told reporters: "His failure to comment doesn't indicate anything, gentlemen. His failure to comment is simply that he cannot discuss what went on in the grand jury room."

Bakker's aide Taggart, through his lawyer, pleaded the Fifth Amendment during a deposition in July when asked, "Have you ever had sexual relations with James O. Bakker?"

Told by a reporter Tuesday outside the federal courthouse that Bakker had denied ever having a homosexual relationship with anyone, Babcock replied: "I'm saying he's a liar."