The editor of The Daily Mirror fired in a row about fake photos of prisoner abuse in Iraq is demanding £1 million ($1.77;€1.47) compensation.
Trinity Mirror, owner of the mass market tabloid, is refusing to comment.
It has dismissed suggestions it was pressured by US shareholders to sack Piers Morgan after he refused to apologise.
A statement issued after Morgan was dismissed said the newspaper had "published in good faith photographs which it absolutely believed were genuine images of British soldiers abusing an Iraqi prisoner."
It went on to say that the pictures were fakes, that the paper had been victim of "a calculated and malicious hoax", and that it was "inappropriate" for Morgan to remain.
The mass market tabloid, which has a declining circulation of 1.9m, published a series of sensational photographs earlier this month which allegedly showed British troops abusing the man.
The photographs, which followed those in the US media showing American soldiers torturing Iraqi prisoners, caused a major political row in the UK.
The British prime minister Tony Blair subsequently claimed there had been no "systematic" abuse of prisoners by UK forces in Iraq.
However, several British soldiers have been accused of brutalizing eight Iraqi detainees, one of whom subsequently died from his injuries last September.
Data sourced from: MediaGuardian.co.uk; additional content by WARC staff