Lee Hsien Loong looks at a computer screen at Yahoo headquarters in Sunnyvale, Califorina, on May 7, 2007

Prime Minister Lee Hsien Loong on Thursday filed a defamation suit against a blogger who accused him of misusing public funds, setting the stage for the first court case of its kind in Singapore.

Lee's lawyer Davinder Singh told the High Court that a May 15 post by Roy Ngerng Yi Ling, a 33-year-old government health worker, contained statements that alleged "criminal misappropriation" by the premier.

Lee had earlier rejected an apology and compensation offer from Ngerng, who writes a blog called "The Heart Truths" which had more than 3,300 followers soon after the lawsuit was filed.

In general, civil suits are launched in the Singapore High Court when the value of claims is above Sg$250,000 ($199,000), according to guidelines posted on a government website. The court will have the final say on the amount to be awarded.

Ngerng, who has publicly vowed not to be silenced, is the first blogger taken to court for defamation by a political leader in Singapore.

"The offending words and images, in their natural and ordinary meaning, meant and were understood to mean that the plaintiff, the Prime Minister of Singapore and Chairman of GIC, is guilty of criminal misappropriation of the monies paid by Singaporeans to the Central Provident Fund (CPF)," lawyer Singh wrote in a court filing.

GIC is a sovereign wealth fund that manages more than $100 billion of the city-state's foreign reserves. CPF is the state pension fund.

Lee had been "brought into public scandal, odium and contempt" and his character and reputation had been "gravely injured" by the accusations, Singh added.

Ngerng has previously said the article was meant to call for greater transparency on how the pension fund is handled.

- 'calculated and cynical' -

On Tuesday, he offered Lee Sg$5,000 as compensation but Lee immediately dismissed it as "derisory" and said Ngerng's earlier apology was "not and never meant to be genuine".

Lee also took offence at subsequent actions by Ngerng, including posting a YouTube video about his legal predicament and sending emails to the media that included alternative links to posts that allegedly carried "offending posts".

In the filing, lawyer Singh described Ngerng's conduct as "calculated and cynical," adding that he acted to "use the libels to promote himself and cause further distress and injury" to Lee.

Singh said Lee was claiming damages, legal costs, and an injunction to stop Ngerng from further defaming Lee, but did not give financial details.

"I will be leaving it to my lawyer M.Ravi to deal with the latest development and the relevant legal procedures," Ngerng told AFP after the court filing.

A pre-trial conference has been set for July 4.

Singapore's local media is tightly controlled, leaving independent bloggers as the strongest critics of the long-ruling People's Action Party (PAP).

Prominent Singaporean activist Alex Au last year apologised to Lee and removed a post after receiving a notice from Singh. Lee did not pursue damages against Au.

Media firms like Bloomberg, The Economist and Financial Times have previously paid damages and apologised to Singapore leaders including Lee and his father, former prime minister Lee Kuan Yew, for publishing articles found to be defamatory.

International human rights groups have accused Singapore leaders of using financially ruinous libel actions to silence critics and political opponents.

But the Lees and other key leaders of the PAP have countered that the lawsuits are necessary to protect their reputations from unfounded attacks.