Hazel Blears, the secretary of state for communities, is facing legal action from a leader of the Muslim Council of Britain after she said he had called for violence against Jews and British troops.
Lawyers acting for MCB deputy secretary general Dr Daud Abdullah have accused Ms Blears of adopting "an extraordinary and malicious interpretation" of a declaration that he signed earlier this year.
Ms Blears demanded the resignation of Dr Abdullah following his participation in a global anti-aggression conference in Istanbul, stating that the declaration "calls for violence against troops and Jewish communities".
Abdullah strongly rejects the claims, repeated by the communities secretary on several occasions, including in a letter to the Guardian newspaper and on television.
Dr Abdullah says the accusations from the government and says they are "entirely untrue". He has given Ms Blears until 15 April to retract and apologise, or else to face a libel action.
He said late last week: "I do not advocate attacks on any religious community. Both I and the MCB have done everything possible to de-escalate the crisis ... we have explained all our concerns and have met with parliamentarians to move on. But the government has tried to publicly humiliate me ... I felt obliged to defend myself in a legal manner against these serious and defamatory allegations."
A spokesperson for the Department for Communities and Local Government said: "We have been in dialogue with the MCB since 6 March 2009 seeking clarification of the actions taken by Dr Abdullah in relation to the serious issues raised by the articles in the Istanbul declaration."
He continued: "We are concerned with those articles which appear to call for violence and Dr Abdullah's repeated unwillingness to distance himself from those articles specifically."