Craig Murray plans to take the Foreign Office to court over the way it handled false allegations and attempted to discredit his vociferous criticism of Tashkent's use of torture.
Among the allegations against the 45-year-old diplomat are that he offered visas for sex, drove an embassy car down a flight of stairs and drank to excess.
The Foreign Office has banned Murray from speaking to the press about his action.
The case is thought to be the first time a serving ambassador has sued his own government and is certain to prove an embarrassment to Foreign Secretary Jack Straw.
Private life disaster
The ambassador was severely sick last summer suffering from what people close to him said was depression prompted by a probe into his flamboyant personal life.
In November he briefly returned to his desk in Tashkent but within days was back in Britain for more treatment.
Since taking up his post last year, Murray publicly stated several times that Uzbekistan's support for the US-led anti-terror effort did not give it the right to commit human rights abuses.
Human rights groups estimate that as many as 6,500 people are imprisoned on religious or political grounds in the former Soviet Central Asian republic.