The Tories' Deputy Chair Lee Anderson is facing libel proceedings after he "made defamatory allegations of bribery" against a man who runs a foodbank.
It comes less than a week after Rishi Sunak appointed Lee Anderson to the key Conservative Party role - despite a string of controversial comments.
Lawyers at Bindmans LLP acting on behalf of Michael Hollis, issued a statement regarding a Facebook post by Mr Anderson on February 1.
They claim he made "defamatory allegations of bribery against a local man, Michael Hollis, who runs a foodbank charity".
The statement on the law firm's website published on Monday also said the Deputy Tory Chairman "refused to remove his post".
They said: "Mr Anderson claimed in a Facebook post published to his 35,000 followers that money had changed hands in brown envelopes in relation to a planning application made by Mr Hollis.
"Mr Hollis is outraged by the allegations and, after Mr Anderson refused to remove his post, has taken the first steps towards a libel claim against him".
Mr Anderson's social media post included a screenshot of a planning application made in Mr Hollis's name, referring to a property in Silverhill Lane, Sutton-in-Ashfield, Nottinghamshire.
It was listed as a valid application on December 12, 2022, with a decision due by February 6.
The Mirror has contacted Mr Anderson and the Conservative Party for comment.
The legal action follows a string of controversial statements by Mr Anderson, including suggesting people using foodbanks "cannot cook properly" and "cannot budget" in a Commons speech last year.
Shortly before his appointment, Mr Anderson compared the Government to the "band on the Titanic" over its asylum seeker policy, according to a string of leaked WhatsApp messages.
He also called for the return of the death penalty, saying "nobody has ever committed a crime after being executed" in a magazine interview.
After the comments the Prime Minister was forced to say he did not support the return of capital punishment.
"That's not my view, that's not the Government's view," Mr Sunak said.
