Lord McAlpine's solicitors have indicated that they intend to go after every individual who linked him on Twitter to the BBC Newsnight child abuse allegations of 2 November.
They have asked those who did so to come forward and apologise. But they have also warned that they are using technology to track down all who did so and seek "settlements".
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This paves the way for numerous journalists who named McAlpine on Twitter – assisting with a jigsaw identification process – to face legal action.
The Guardian's George Monbiot has already apologised for his role in the affair.
The BBC today reported it was in the process of agreeing a settlement package with the former Tory Party treasurer.
Lord McAlpine said the Newsnight investigation had left him devastated and got into his soul.
He said the whole matter could have been avoided if BBC investigators had called him and offered him the right to reply to the allegations before the report was aired.
Lord McAlpine told BBC Radio 4's The World at One programme (an interview to be broadcast today): "They could have saved themselves a lot of agonising, and money actually, if they had just made that telephone call.
"They should have called me and I would have told them exactly what they learned later on – that it was complete rubbish and that I had only ever been to Wrexham once in my life."
He added: "It gets into your bones, it makes you angry, and that's extremely bad for you to be angry, and it gets into your soul and you just think there is something wrong with the world."
Lord McAlpine's solicitor Andrew Reid told Radio 4 he was hoping to agree a settlement with the BBC today.
He said: "Lord McAlpine is more than aware that the ultimate people who will paying for any monies that he may receive are in fact the licence payers, the people who really own the BBC, and he is very much aware of this and hence any agreement that is reached is tempered in the light of that."
On the subject of the many Twitter users who named McAlpine in connection with the story on 2 November and the days afterwards, he said: "What we are basically saying to people is, we know – in inverted commas – who you are, we know the extent of what you have done and its easier to see us and apologise and arrange to settle with us."
Although the 2 November Newsnight programme did not name the peer – referring only to a senior Conservative from the Thatcher era – it quickly resulted in him being identified on internet blogs and social media sites.
The current affairs show later carried a full, on air apology for the broadcast.
Although legal advice was sought over the report, no right of reply was offered to the unnamed individual at the centre of the allegation.
Monbiot has already issued an apology on his website.
He said: "I have done a few stupid things in my life, but nothing as stupid as this. The tweets I sent which hinted – as I assumed to be the case – that Lord McAlpine was the person the child abuse victim Steve Messham was talking about were so idiotic that, looking back on them today, I cannot believe that I wrote them.
"But I did, and they are unforgiveable. I helped to stoke an atmosphere of febrile innuendo around an innocent man, and I am desperately sorry for the harm I have done him. I have set out, throughout my adult life, to try to do good; instead I have now played a part in inflicting a terrible hurt upon someone who had done none of the harm of which he was wrongly accused. I apologise abjectly and unreservedly to Lord McAlpine."