Townsville Labor MP Cathy O'Toole says Mr Palmer has commenced defamation proceedings against her.

"I certainly will be contesting the proceeding he has brought against me," Ms O'Toole has told The Courier-Mail.

A spokesman for Mr Palmer would only say the action was underway. The nature of the comments that sparked the claim have not been detailed.

Earlier this month, Townsville mayor Jenny Hill issued a public apology to Mr Palmer to help settle a defamation case he'd brought against her over comments she made about the collapse of his Queensland Nickel business.

Mr Palmer has been on a charm offensive in his new home of Townsville, splashing cash to community groups and saying he has "no doubt" he can win Ms O'Toole's seat.

In June he resuscitated his deregistered Palmer United Party, dropping his name from the tile and promising the United Australia Party would be a party for all Australians.

The party intends to contest all upper and lower house seats at the next federal election.

He's also bought a new luxury pad in Townsville and is living there full time after again promising to reopen his moth-balled nickel refinery and partly repurposed as a cobalt extraction facility.

Mr Palmer has said the people of Townsville trust him to create new jobs and economic prosperity after 800 workers lost their jobs and creditors were left with huge debts from the 2016 collapse of Queensland Nickel.

Ms O'Toole has previously said Mr Palmer is kidding himself if he thinks the people of Townsville have forgiven him.

He's facing ongoing court action over the collapse of Queensland Nickel but has denied any wrongdoing.

Mr Palmer is also facing an unrelated criminal charge brought by the corporate regulator, which he's described as politically motivated.

The businessman held the Sunshine Coast seat of Fairfax from 2013 and did not contest his seat at the 2016 election.

Australian Associated Press