The Commissioner for the British Indian Ocean Territory is being sued for complicity in the alleged rendition and torture of a Libyan rebel who is now head of the Tripoli Military Council.
Law firm Leigh Day & Co announced today it had filed legal papers against the Commissioner in the High Court on behalf of Abdel Hakim Belhadj, who says he was rendered to Libya via British-controlled Diego Garcia in 2004.
Belhadj, who has been hailed for his role in the uprising against Muammar Gaddafi's regime last year, is already suing the UK government, its security forces, and Sir Mark Allen, a former director of counter-terrorism at MI6.
The Libyan claims that evidence of the UK's role in the alleged rendition of him and his wife, Fatima Bouchar, is detailed in a number of documents held by the Libyan security services, which came to light after Gaddafi was ousted.
In papers filed at the High Court last week, Leigh Day & Co claim that the commissioner for the British Indian Ocean Territory was also complicit in the couple's alleged rendition and their imprisonment in Diego Garcia.
The lawyers said the action was being taken against the Commissioner's office rather than any particular individual.
Solicitor Rosa Curling, of Leigh Day & Co, said: "The evidence we have seen suggests that our clients were sent back to Libya via Diego Garcia, with the UK Government's involvement and knowledge.
"Our clients want to know the truth about what happened to them and who was responsible. This Government needs to be open and transparent about the mistakes of the past, so as to ensure they are not repeated in the future."
Mr Belhadj had been living in exile in Beijing, China, in 2004 when he says he was tortured after being detained with his wife en route to the UK where they were trying to seek asylum.
British ministers have always denied any complicity in rendition or torture and the coalition Government established an inquiry into whether the UK was involved in the "improper treatment of detainees" after 9/11.
However, the inquiry was mothballed in January after the Metropolitan Police announced it was investigating Mr Belhadj's claims.
Cori Crider, legal director at Reprieve, which has been instructed as US counsel for Mr Belhadj, suggested that British ministers had either lied about the case or had been misled.
"We have asked the Government for months to say whether Belhadj and his wife were sent to Gaddafi via Diego Garcia as planned. They refused.
"If he did, then ministers right up through (then foreign secretary) David Miliband in 2008 have either been deceived, or lied. All the family want is for the whole truth of their fate, and Britain's role in it, to be known, so these mistakes never occur again."
Sir Malcolm Rifkind, the former Conservative foreign secretary and chairman of the Intelligence and Security Committee, said today the picture emerging about Mr Belhadj's case was "very, very worrying indeed".
"If he was rendered to Libya and if the UK intelligence agencies and the UK Government was involved, that is not only contrary to the policy the British Government has pursued for a long number of years but also to assurances that were given to the Intelligence and Security Committee and to Parliament as a whole," he told the BBC.
He said his committee would take detailed evidence from the intelligence agencies once the police had conducted their inquiries.
"I'm absolutely certain that when these inquiries are complete by the police that unless there were to be prosecutions, which would of course delay the matter further, we would then wish to conduct our own detailed inquiry including taking evidence from the relevant intelligence agency," he said.
A Foreign Office spokeswoman said: "A police investigation is under way, so we are unable to comment. HMG (the Government) will co-operate fully with investigations into allegations made by former Libyan detainees about UK involvement in their mistreatment by the Gaddafi regime.
"HMG will hold an independent judge-led inquiry once police investigations have concluded."