The opposition believes Dr Gillespie may have an indirect financial interest in the Commonwealth - grounds for disqualification from office under section 44(v) of the constitution.

The Nationals MP owns a small suburban shopping complex at in Port Macquarie and one of the shops is an outlet of Australia Post – a government-owned corporation.

The ALP has obtained high-level legal advice which says this arrangement could result in Dr Gillespie's election being ruled invalid.

Labor's national executive signed off on the challenge at a meeting on July 7 and papers were subsequently served on Dr Gillespie.

Dr Gillespie has refused to comment on the challenge as it is now a “legal matter”.

If Dr Gillespie is disqualified it would spark a byelection in his seat of Lyne, potentially bringing down the government which only has a one-seat majority.

The case is being brought by the former Labor candidate for the seat, Peter Alley. Mr Alley is also a sitting councillor for Port Macquarie-Hastings Council.

"This is not a step that has been taken lightly," Mr Alley said. "It has been taken after considering expert legal advice from senior counsel about the constitutionality of Dr Gillespie's election in 2016.

"I don't believe I have a choice but to make this application. Over 100,000 people who voted in Lyne last year deserve to know that the Member for Lyne was eligible to be elected. This is their democratic and constitutional right."

Mr Alley said the government had sought to turn a blind eye to Dr Gillespie's constitutional problems and the High Court was "the most appropriate venue for it to be properly and fairly considered".

The ALP has assembled a high powered legal team to argue the case, led by Bret Walker SC and barrister James Mack. Ray Finkelstein QC is also assisting.

If there is a byelection the Nationals will be well-placed to retain the seat but it would be an enormous political headache for the Coalition. The seat was previously held by independent Rob Oakeshott.

Dr Gillespie won the seat only after Mr Oakeshott announced his retirement in 2013.

Dr Gillespie and his wife, through their company Goldenboot, lease the shop space in question to a local woman who is an Australia Post licensee – meaning he has no direct financial link to the postal service.

Section 44(v) of the constitution says any person who "has any direct or indirect pecuniary interest in any agreement with the Public Service of the Commonwealth otherwise than as a member and in common with the other members of an incorporated company consisting of more than 25 persons shall be incapable of being chosen or of sitting as a senator or a member of the House of Representatives".

The section is an anti-corruption measure, designed to stop people sitting in Parliament and at the same time making money through contracts with the Commonwealth.

At a Senate estimates hearing last month Attorney-General George Brandis revealed he had urged Dr Gillespie to seek his own legal advice on the matter. He did, from prominent Sydney SC Guy Reynolds.