The DUP is refusing to comment on a newspaper story alleging Westminster candidate Paul Berry met a male masseur in a Belfast hotel last week.
DUP candidate Paul Berry denied anything improper happened
Mr Berry has denied that anything improper happened.
The outgoing DUP MP Nigel Dodds said the matter was in the hands of legal advisers.
The Sunday World said on Tuesday it had not received anything from Mr Berry about an intended legal action and said it was standing by its story.
The newspaper's editor, Jim McDowell, said the paper had been contacted by a gay man who did not wish to reveal his identity at the moment for family reasons.
The man claimed he had met Mr Berry in a chat room accessed via mobile phones and had received more than 120 text messages from Mr Berry's phone over a number of days.
"We have proof of all of these, we ran a couple of them in the paper on Sunday and at one stage Mr Berry actually texted his photograph to this gay man, who we shall call Gary.
Mr McDowell said that "Gary" had come to the Sunday World to expose what he thought were hypocritical attitudes towards gay people.
"There was no money involved, he didn't ask us for money he didn't want anything other from us other than, as he said, to expose the hypocrisy of the DUP and the Free Presbyterian Church.
"Paul Berry is prominent in both."
Mr McDowell defended his paper's handling of the story and said he had had a long conversation on the telephone with Mr Berry who refused to meet him to discuss the allegations.
"We did not allege in the paper that a sex act took place. What we reported was Mr Berry's denial that a sex act took place."
He said Mr Berry had confirmed to him that his phone had been used and that he had travelled to the Ramada hotel in Belfast for a sports massage.
At a DUP news conference on Tuesday the party's outgoing MP for North Belfast, Nigel Dodds, was asked for the party's response to the story by the BBC's political correspondent Martina Purdy.
"I've no comment to make, that's in the hands of legal advisers," he said.
Mr Dodds was then asked if there was a writ coming and whether he still had confidence in the Newry and Armagh candidate, but he said he could not say anything else for legal reasons.
He then repeated a number of times that the matter was "in the hands of legal advisers".
Paul Berry has been a rising star in the DUP.
In 1998 he was elected to Stormont for Newry and Armagh at the age of 24, becoming the youngest member of the Assembly.