Turkish Prime Minister Recept Tayyip Erdogan is demanding libel damages over a story in the Daily Telegraph.
The politician argues that a story headed "Iran gives Turkey's ruling party £16m after vote on reforms" was defamatory.
The story, which ran in September, claimed he had improperly negotiated a donation of $25m to his political party from Iran to further his party's campaign in the upcoming general election, he says.
The story also claimed Erdogan had improperly allowed Iran to influence and interfere in the internal democratic processes of Turkey and its ruling party AK Parti policy, he says. Erdogan says the innuendo in the story meant he had acted unlawfully and committed a criminal offence.
He is also suing over an online version of the story which appeared on the Telegraph website for some hours, illustrated by a photo of Erdogan and President Ahmadinejad of Iran shaking hands.
The website version contained an extra sentence quoting the Turkish government as denying having received the money and Erdogan says this carried the extra meaning that he had dishonestly denied receiving the donation from Iran, knowing this denial to be false.
His personal and political reputation have been seriously injured by the story, according to a High Court writ.
Erdogan, who has been Prime Minister of Turkey since 2003, is also seeking aggravated damages, saying the paper did not contact him, or any representative of his party or government before running the story.
The press counsellor from the Turkish Embassy in London contacted the paper's foreign editor at 9pm on 14 September, saying the allegations were entirely untrue, and that Turkish political parties were not allowed to receive foreign funds, the writ says.
Despite this, the Telegraph republished the allegations in the next morning's paper, without mentioning the denial, the writ says.
Erodgan says that after the press counsellor's intervention, the online story carried an extra sentence which was introduced so dismissively that no reasonable reader would have given it any credence.
The Telegraph failed to remove the story until 27 September, and has not published an apology, correction or retraction, and has failed to reply to a detailed letter of claim, the writ says.
As a result of the story, the gist of the allegations have been repeated in other newspapers, websites and blogs, the court will hear.
Erdogan is also demanding an injunction banning Telegraph Media from repeating the allegations at the centre of his lawsuit.
Telegraph Media Group declined to comment.