"I talked to Togadiaji. He said he did not make such a statement," Bharatiya Janata Party (BJP) spokesperson Prakash Javadekar told news persons here.
He added that the VHP leader said he will take "legal action" against the report.
According to news reports, Togadia, at a Saturday rally in Bhavnagar of Gujarat, said Muslims should be stopped from buying properties in Hindu areas.
Togadia reportedly sent a legal notice to a leading newspaper for the report
On Saturday night, Togadia joined a group of VHP and Bajrang Dal members on a street protest outside a house purchased by a Muslim businessman near Meghani Circle in Bhavnagar.
While saffron groups have been regularly organizing 'Ram Dhun' and 'Ram Darbar' programmes to thwart such deals, Togadia reportedly went a step further and asked the protestors to take complete control of the house and put a 'Bajrang Dal' board on it.
The report said he gave the Muslim occupants 48 hours to vacate the house.
"If he does not relent, go with stones, tyres and tomatoes to his office. There is nothing wrong in it. Killers of Rajiv Gandhi have not been hanged ... there is nothing to fear and the case will go on," Togadia was quoted in the report as saying.