Ioannou said there had also been 300,000 questionable votes for his main rival Abdullah Abdullah, the former foreign minister, with the rest of the suspicious votes cast for other candidates.
The comments were made hours before the Independent Electoral Commission (IEC) announced final preliminary results giving Karzai 54.6 per cent and Abdullah 27.8 per cent of the vote - although the results will not be confirmed until all cases of fraud are investigated.
Abdullah said that the announcement of the preliminary results was premature.
"First of all this is not final. Second of all this is not right that they are making this announcement, according to the electoral law, because the issues of complaints have not been dealt with," he told Al Jazeera.
"Also it includes hundreds and thousands fraudulant votes ... those are included in these results so it doesn't mean a lot."
'Irresponsible'
Philippe Morillon, the EU chief election observer, told Al Jazeera that what was needed now was an investigation and a decision as to how to proceed.
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"It just adds more controversy... The EU was the largest independent group in Afghanistan monitoring those elections on August 20"
Zeina Khodr, Al Jazeera correspondent in Kabul
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"Over a million votes are suspect and must be investigated ... the decision as to whether there will be a first round or second round election victory is in the hands of the Election Complaints Committee (ECC)," Morillon said.
Zeina Khodr, Al Jazeera's correspondent in Kabul, the Afghan capital, said: "Karzai's campaign spokesman has told Al Jazeera that the statements made by the EU representative were irresponsible.
"According to the spokesman it is not the job of the EU to talk about fraud, recounts and re-runs ... that job is for the ECC.
"Their decision will decide the final outcome of the vote."
Arsala Jamal, Karzai's spokesman, said that the comments were made by the EU to put pressure on the IEC and ECC.
"We clearly see some kind of pressures on the IEC and ECC from outside and this is one of the pressures."
EU observers did not give an estimated figure for turnout, but Al Jazeera's correspondent James Bays reported that total voter turnout according to the IEC is believed to be about 5.5 million.
The total registered electorate was 17m, with more than 400 stations containing suspected fraud so-far excluded.
Legitimacy questioned
Electoral officials have already warned that hundreds of thousands of votes could be quarantined for two to three weeks for investigations, delaying the announcement of the victor.
Any final victory of less than 50 per cent would trigger a second round run-off.
Khodr said: "It just adds more controversy... The EU was the largest independent group in Afghanistan monitoring those elections on August 20.
"For an EU representative to say that there was massive fraud really calls into question the legitimacy of the election.
"The Afghan people really are growing impatient and frustrated and fearing the danger of such a political vacuum in the country."