John Swinney has promised to mount a "vigorous" defence of his leadership of the Scottish National Party.
Mr Swinney's party suffered at the last election
Glasgow activist Bill Wilson has put his name forward to stand against Mr Swinney at the party's September conference.
He accused the SNP leader of ignoring the views of grassroots members and said his challenge would give them a chance to speak out.
However, Mr Swinney said he had every intention of continuing as leader "for a long time to come".
He said: "The choice is now between my leadership, which is about building the SNP
into a strong and credible political force capable of defeating the Labour Party, or engaging in student politics that - as we've seen so graphically this morning - will delight the Labour Party.
"This is not a time for people to play games with the future of the SNP; divided parties do not win public support.
"This is a time for the SNP to come together to build for the future.
"I will contest this challenge vigorously to safeguard the future of the SNP. And I am determined to win the contest well."
Deputy leader Roseanna Cunningham claimed Dr Wilson was a "stalking horse" candidate put forward to "weaken and damage" the leadership.
But that was rejected by the former election candidate for Glasgow Maryhill, who described the party's showing at the Holyrood elections as a "damaging side-show".
Grass roots members
Speaking to Clyde News, he said: "Whoever wins now will be the leader for a year.
"There's no stalking horse issue. This is an issue for the grassroots members.
"It's to give them a chance to speak out and say they are not happy with the direction of the party."
Dr Wilson said that a strong vote for him would send a message to the leadership.
He said the SNP had failed to "fight hard on the independence agenda" at the May election.
Roseanna Cunningham believes the contest is unnecessary
And he added: "I've had a lot of contact from grass roots members saying 'somebody please stand', we want this party back to democracy, we don't want centralised control, we don't want New Labourisation."
Some former SNP members said they were not surprised by the move.
Bill Taggart was a member of the party for 24 years but left to join the Scottish Socialist Party.
He said: "SNP members were banging their heads against a brick wall and there was a lot of in fighting and backstabbing.
"The party has gone down hill, it has lost its way and a lot of people are not happy. The leadership don't listen."
And former SNP MSP Dorothy-Grace Elder, who quit because of what she believed was "stupid, arrogant and bullying behaviour", said the grass roots and the "good people" had lost control of the SNP.
But Ms Cunningham said she wished the people behind the "fake contest" would be a bit more honest.
"If they want to stand up against John, have a proper leadership campaign and not a stalking horse campaign like this.
"This is just designed to weaken and damage, let there be no doubt about that," she said.
Alex Neil, who was defeated in the SNP's last leadership race by Mr Swinney, refused to comment on the challenge.
Mr Neil, who is celebrating his silver wedding anniversary in Australia, said Scottish
politics was "not foremost in my mind".
"This is all news to me. I have not been involved at all," he said.
"It is Bill Wilson's decision, and it's nothing to do with Alex Neil."
Labour business manager Patricia Ferguson said the leadership challenge had been "inevitable" since the election campaign.
"We are less than 24 hours into this contest and the crisis surrounding John Swinney's leadership is deepening," she said.
"Even his key lieutenants are unable to kill rumours of a party wide movement