LEGAL proceedings have begun against federal MP Craig Thomson alleging he used his union credit cards, or cash advances from the cards, to pay thousands of dollars to brothels and escort agencies.

Fair Work Australia has also alleged in its statement of claim, filed in the Federal Court yesterday, that Mr Thomson used funds, ultimately provided by members of the Health Services Union, to pay for personal travel expenses and unauthorised cash advances totalling $102,337.

The national industrial umpire is seeking to level penalties against the former Labor MP turned independent worth hundreds of thousands of dollars. It is also seeking repayment of funds to the HSU.

While the accusations are in a civil court and separate from ongoing police investigations, the federal opposition says the penalties sought could bankrupt Mr Thomson, rendering him ineligible to sit in the Parliament.