At the beginning of the week, we reported that Tiscali was seeking legal action after a marketing campaign by BT, which questioned the future of its broadband service.

Letters were sent to Tiscali broadband customers implying that the Tiscali business may be sold throwing doubt on the future of the service.

Now Tiscali's lawyers have obviously decided that they have got a case.

Tiscali has begun legal proceedings against BT "for defamation and malicious falsehood".

But BT is denying that it has done anything wrong.

"Following media reports suggesting that Tiscali was up for sale we recently approached a number of Tiscali customers, and pointed out the benefits of our service", a spokesman told the Beeb.

"We believe this is a legitimate and reasonable business practice - comparative marketing is an important aspect of a competitive market", he added.

The case is expected to probe into how BT got contact details for Tiscali's customers, as well as questioning its marketing tactics.