The makers of a Channel 4 documentary have confirmed they are suing West Midlands Police and the Crown Prosecution Service (CPS) for libel.
The Dispatches programme, Undercover Mosque, tackled claims of Islamic extremism in the West Midlands.
In November media regulator Ofcom rejected police and CPS claims the programme was heavily edited and distorted preachers' comments.
The force said itself and the CPS were in talks with the programme's makers.
A statement on behalf of Dispatches editor Kevin Sutcliffe and programme makers Hardcash Productions said: "The statements made by both the West Midlands Police and the CPS were completely unfounded and seriously damaging to our reputation.
"We feel the only way to set the record straight once and for all is to pursue this matter through a libel action."
Ofcom report
West Midlands Police previously said it had received a number of complaints from people about the programme, shown in January 2007, which led it to carry out an investigation.
The Crown Prosecution Service said there was insufficient evidence to bring charges against anyone, but it did raise concerns about the production of the programme.
Ofcom said in its findings that there was no evidence the one-hour documentary had misled the public.
The report concluded that the programme had been a legitimate investigation dealing with matters of public interest.
Researchers from the programme infiltrated a number of mosques, one of which was Green Lane Mosque in Small Heath, Birmingham.
Libel action
In a statement, a Channel 4 spokesperson said: "We fully support this libel action as we feel that it is the only way to vindicate their reputations and to prove this was a responsible piece of public interest journalism."
The channel added that any payment of damages would go to charity.
West Midlands Police said in a statement: "As a result of the concerns raised by Hardcash, the CPS and West Midlands Police are currently in discussions with the programme makers with a view to reaching an appropriate solution."
A spokeswoman for the CPS said: "The matter is in the hands of our lawyers and we have nothing more to say at this point."
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