Former Conservative Party leader Colin Craig has withdrawn his claim for damages this morning as the High Court hearing between himself and Rachel MacGregor begun.

MacGregor has gone head to head in court with her former boss, both alleging they have been defamed by the other.

Craig, representing himself, said he was formally withdrawing his claim for damages having become aware in the media that MacGregor could not pay them.

"At the heart" of the case was the nature of the personal and professional relationship between the two, he said.

Craig said MacGregor "retrospectively changed her view of the relationship" and her subsequent disclosures did not reflect the real relationship, he said.

"This turned in a media firestorm – this engulfed me and became well published in pretty much every news forum around the country."

It was used against him by others to undermine his leadership of the Conservative Party, Craig said.

MacGregor acted as a press secretary for Craig from 2011 to 2014, picking up the role just three months prior to an election.

"We developed a very close and affectionate working relationship and a close friendship."

Those late nights were confined to work, he said.

MacGregor's evidence would say it was "a ruse or some method to spend some time together – I dispute that".

Craig said hundreds of positive exchanges included cards, letters, email and texts.

Craig said he was "ambushed by media" and asked why MacGregor had resigned calling him a "manipulative man".

MacGregor was represented in court by Kensington Swan lawyers Hayden Wilson and Linda Clark.