Abdel Hakim Belhaj said he and his wife were detained in Bangkok in 2004, then transferred to Abu Salim jail, Tripoli.
He said he was held there for six years and often tortured.
The UK Foreign Office does not comment on intelligence matters but says the government is holding an inquiry into claims of detainee rendition.
Living in exile
Mr Belhaj, who is now the military commander of Tripoli, worked with Nato as one of the leaders of the forces that helped overthrow Col Muammar Gaddafi.
But he claims that during his time in prison he was interrogated by agents from countries including the UK and US as a suspected al-Qaeda sympathiser.
He said his pregnant wife was also imprisoned in Libya for four months and released just before she gave birth.
They had been living in exile in Beijing after Mr Belhaj had led a low-level insurgency against Col Gaddafi.
In September, Mr Belhaj told the BBC that after he was captured he was tortured by the CIA and Gaddafi forces.
"What happened to me was illegal and it deserves an apology," he said.
Mr Belhaj said he was beaten, hung from walls and cut off from human contact and daylight, before being sentenced to death during a 15-minute trial.
A spokeswoman for the legal campaign group Reprieve said the UK government's failure to issue an apology had led Mr Belhaj's lawyers, from Leigh Day & Co, to send a letter initiating legal action.
The government now has six months to respond, she said.
Sapna Malik from Leigh Day & Co, said: "The barbaric treatment which our clients describe, both at the hands of the Americans and the Libyans is beyond comprehension and yet it appears that the UK was responsible for setting off this torturous chain of events."
A spokeswoman for the UK Foreign Office said it was government policy not to comment on intelligence matters, but added: "This government established the Detainee Inquiry which will look at allegations of whether Britain was involved in, or aware of, the improper treatment, or rendition, of detainees held overseas by third parties in the aftermath of 9/11.
"The inquiry has confirmed that it intends to consider allegations of UK involvement in rendition to Libya as part of its work."
The allegations in Mr Belhaj's case came to light after documents abandoned by the Gaddafi regime were found by rebel forces and representatives from human rights groups.