Former Conservative MP Harvey Proctor is suing the Metropolitan Police and his accuser for falsely naming him as a child sex abuser.
The ex-politician is seeking £1m in damages, on the grounds that the allegations and subsequent Met investigation caused him to lose his job and home and suffer from depression.
Scotland Yard has said it will be defending the claim, which was launched in the High Court.
It will mean that the man who accused him, who goes by the pseudonym "Nick" as his identity cannot be revealed for legal reasons, will have to give evidence in open court.
Proctor was accused along with several other high-profile MPs of being part of a paedophile ring operating at the heart of Westminster. Lord Bramall, Leon Brittan and even former Prime Minister Edward Heath also had the finger pointed at them.
The claims were investigated as part of Operation Midland, launched by the Met in 2014, and Proctor was questioned by police over the alleged killing of two young boys and assisting in the murder of a third.
Later his house, in the grounds of Belvoir Castle where he was working as private secretary to the Duke of Rutland, was raided by police.
As the investigation progressed, one Scotland Yard detective said on television that the allegations made by Nick were "credible and true".
Yet Operation Midland was closed in 2016 with no arrests having been made. Brittan died during before it had been concluded, not knowing that he had no case to answer.
Proctor claims that Nick's allegations were "false and malicious", and that the accuser perverted the course of justice.
Nick was investigated over fraud and perverting the course of justice, and the Crown Prosecution Service is expected to announce later this year whether he will be charged.
According to the BBC, Nick is also facing a trial in connection with six charges of possessing images of child abuse and voyeurism.
Meanwhile Proctor's claim adds that police could have conducted "elementary research" to rule him out of the inquiry.