Winston Peters has been sent a formal letter from former Australia Foreign Minister Bob Carr threatening defamation action.
It follows comments Peters made about Carr's relationship with China in a radio interview
Peters’ office has confirmed it has received the letter from Carr's lawyers.
In the letter, sighted by Newshub, Peters is told his statements were "false and defamatory".
"We place you on notice that we are now in the process of instructing New Zealand lawyers to advise in relation to the immediate commencement in New Zealand of defamation proceedings against you," the letter said. "We are instructed that on 2 May 2024 at about 7:10am you made a number of false and defamatory statements on Radio NZ about our client."
"The Statements are indefensibly defamatory of our client and have no basis in fact. In that regard, our client has never had any business relationship with any Chinese entity, nor has he ever served on the Board of any Chinese company.
"Further, he has never acted as an adviser or consultant to any Chinese company, nor has he ever been in receipt of any income from any Chinese shareholding or investment consultancy.”
On AM on Friday, Labour MP Willie Jackson said Peters had "gone too far".
"I thought it was a terrible comment from Winston, it's unbelievable the way he operates and acts."
But National minister Erica Stanford said she didn't think the Prime Minister "was too bothered" by Peters' Comments.
On Thursday, Prime Minister Christopher Luxon said: "They're not comments I would make. They are comments in the rough and tumble of politics.
"He is doing an exceptional job."
Labour leader Chris Hipkins called Peters' comments "embarrassing for New Zealand".
"It shows Winston Peters has abused his office as Minister of Foreign Affairs. This now becomes a problem for Prime Minister Christopher Luxon.
Peters’ made the comments during an interview about a speech he had given about New Zealand exploring the option of joining Pillar II of the AUKUS pact.
Carr was at Parliament for Labour's anti-AUKUS event last month and was asked if he was blind to China's threat.
"I have criticised China for militarising artificial structures in the South China Sea. I believe extinction of legal autonomy for Hong Kong was wrong," he said.
