Former News of the World editor and Downing Street aide Andy Coulson is suing a division of News International after it stopped paying his legal fees over the phone-hacking scandal.
David Cameron's former adviser is taking action against News Group Newspapers, the publishing arm of the media giant and his former employer.
Papers were served at the High Court on Thursday "regarding the termination of the payment for his legal action".
A spokesman for law firm DLA Piper, which represents Mr Coulson, said: "We can confirm that proceedings have been issued."
News International declined to comment. It had been reported earlier this month that News International was paying DLA Piper for their legal advice to Mr Coulson following his arrest.
Mr Coulson resigned from his Downing Street position in January and was later arrested on suspicion of corruption and phone hacking. He is on police bail.
It has also emerged that the family of Jade Goody fear the late celebrity could have had her phone hacked and are reportedly set to contact Scotland Yard. The police force said it would not comment on individual cases.
Publicist Max Clifford told The Guardian that Ms Goody's mother Jackiey Budden also believes she was targeted.
He said: "She will be going to the police. She believes her phone was hacked by the News of the World, and Jade's. Jade told me, 'I'm convinced my phone is being hacked'."
News International also declined to comment on the allegations.
In addition, it has been alleged last night that Neil Wallis, the former deputy editor of News of the World was paid more than £25,000 by News International while working at Scotland Yard as a police consultant.
A Scotland Yard spokesman said that Mr Wallis's contract with the police force included confidentiality, data protection and conflict of interest clauses, all of which would have prohibited him from selling on any information while employed by them.
He added: "Neil Wallis was not provided access to the Metropolitan Police Service's IT systems."
Phil Smith of Tuckers Solicitors, who represent Mr Wallis told the Daily Telegraph they had complained formally to the Met about leaking information about the case.
The Scotland Yard spokesman added: "On Friday, the Met received a letter of complaint from solicitors acting for Neil Wallis. This is being considered."
Earlier yesterday, it was disclosed that action is also set to be launched against News Corporation by American lawyers over phone hacking at News of the World.
Proceedings will be lodged in New York next week in a bid to seek statements from the media giant, according to Mark Lewis, the lawyer for the family of murdered schoolgirl Milly Dowler.
Mr Lewis, who negotiated a multimillion-pound payout for the Dowler family from News International over hacking claims, said its parent company could also be held responsible for activities at the paper.
"Potentially it has very serious ramifications for News Corporation because the American damages for civil claims are far higher than anything in an English court," Mr Lewis said.
Mr Lewis, of Taylor Hampton, is understood to have instructed Norman Siegel, a New York-based lawyer who represents about 20 families of 9/11 victims.
"The action will be looking at News Corp's liability for action as far as its subsidiaries," Mr Lewis added. "It will raise issues of corporate governance."
The announcement comes days after News International confirmed it was in advanced settlement talks with the parents of Milly over police claims that the 13-year-old's mobile phone was hacked after she went missing.
A total package of around £3 million is being finalised, including a £1 million donation from Rupert Murdoch to charity.
So far 16 people have been arrested on suspicion of phone hacking at the axed tabloid.
By Alastair Jamieson, The Telegraph
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