Besides this, 30-year-old Haneef has also launched a defamation suit against former Immigration Minister Kevin Andrews, reported AAP.
In Jul 2007, Haneef was arrested after his mobile phone SIM card was linked to a failed terror attack in UK. He was detained for 12 day and was charged for supporting a terror organisation.
The terror charges slapped against Haneef were later cleared on the grounds of lack of evidence.
Rod Hodgson, who is part of Haneef's legal team, said that the lawsuit was based on the findings of Clarke Inquiry, which gave the Indian a clean chit.
The law firm is currently in negotiations with the government.
“We do not intend to advance Haneef"s matter through the courts unless negotiations with the government appear unlikely to be satisfactory to Haneef," Hodgson said in a statement.