Prime Minister Lee Hsien Loong is taking legal action against blogger Alex Au for allegations made in a post about the sale of computer systems used by town councils.

A letter of the demand was sent to Mr Au on Friday, saying that an article entitled "PAP mis-AIMed, faces blowback", together with 21 other comments that the blogger allowed to be posted on his site, can be taken together to suggest that PM Lee is guilty of corruption in relation to the transaction between the PAP town councils and the firm Action Information Management (Aim).

"These are false and baseless allegations," said the letter of demand which was from Senior Counsel Davinder Singh of Drew and Napier.

The blog post had raised several questions about the circumstances surrounding the contract signed between the PAP town councils and Aim.

Mr Singh goes on to ask that Mr Au immediately remove the article and comments as well as publish an apology to PM Lee. He has been given two days to comply, before legal proceedings will begin.

This is the second time in in six months that Mr Au has been asked to apologise for an article on his blog. In July last year, he apologised for a blog post on the case of plastic surgeon Woffles Wu's traffic fine after the Attorney-General's Chambers wrote to him to say that his post was contemptuous of the courts for alleging that courts are biased towards the well-connected.

As of 3.30pm on Friday, the post about the town councils was still up on Mr Au's blog.