The Daily Telegraph has published fresh claims about the Labour MP, George Galloway, and his alleged links with Saddam Hussein's regime.
Mr Galloway has instructed solicitors
Mr Galloway has strongly denied allegations he was paid hundreds of thousands of pounds by the Iraqi
regime, and has promised to take "whatever legal action" may be necessary against the newspaper.
Tuesday's paper alleged official documents found by its reporter in Baghdad suggested that in 1999 Mr Galloway had asked an unnamed Iraqi intelligence officer for more money.
Wednesday's Telegraph claims to have found a memo purporting to have been written on behalf of Saddam Hussein, in which the Iraqi leader rejects Mr Galloway's alleged request.
The MP's solicitors have described the Telegraph's allegation that he received £375,000 a year from the United Nations oil for food programme used to feed Iraq as "totally untrue".
A statement from Davenport Lyons solicitors said the Glasgow Kelvin MP had never received any money from Saddam Hussein's regime.
But the Telegraph's editor Charles Moore has also gone on the offensive issuing a statement in defence of the paper's reporter in Baghdad, David Blair.
Mr Moore said his paper, which says it has now received a letter from the MP's lawyers, had observed "conventional journalistic behaviour" in this matter.
In a statement, Mr Galloway's solicitors said: "Mr Galloway has never, directly or indirectly, been granted, nor has he sought, oil or any other commercial contracts with Iraq, nor has he received any
money from Saddam Hussein's regime.
"He has also never, so far as he is aware,
met any member of Iraqi intelligence."
The statement said neither they nor the MP had had an opportunity to examine the documents at the centre of the row.
Mr Galloway says the allegations are untrue
They have asked the paper to supply them with the material upon which the articles were based.
Mr Galloway had already dismissed the official Iraqi letter published in Tuesday's Telegraph as a possible forgery or as having been doctored to discredit him.
The MP, who is in Portugal writing a book, told BBC Two's Newsnight the allegations were part of a "smear
The MP, whose seat will disappear in boundary changes at the next election, also said if he was not selected to stand as a Labour MP he would stand as an independent.
He is confident party members would select him to stand in Glasgow central.
But he said: "If we are cheated of that right then of course I will defend that seat as an
George Galloway's career has been written off many times before
Labour NEC member
Before the Telegraph's claims, Labour's ruling body was looking into Mr Galloway's anti-war comments, with speculation it could withdraw the whip.
On Wednesday, Conservative leader Iain Duncan Smith called for a parliamentary inquiry into the allegations.
Mr Duncan Smith said: "If he clears his name, then fine. But I do think there needs to be an investigation by the privileges committee."
Commons committees usually avoid examining cases which are heading for court - as Mr Galloway intends in his libel action.
Mark Seddon, a member of Labour's ruling National Executive Committee, predicted any party disciplinary moves against Mr Galloway would also be put on hold while the court case played out.
"I do not believe George Galloway took money from the Iraqi regime," Mr Seddon told BBC Radio 4's Today programme.
"But if it were proved as a result of the court case that he did take money from the regime, then I think his career in the Labour Party would be over and he would probably acknowledge that too.
"But if it comes down to his political views, then that is something else entirely.
"And it is right in a democracy to say what he wants and at the end of the day, if his constituents in Glasgow don't like what he says, they can get rid of him at the next election."