Mr Palmer's lawyers have filed a notice of arbitration targeting the Commonwealth under international trade law.
It is the latest front in Mr Palmer's ongoing quest for compensation over the development of the Balmoral South iron ore mine in Western Australia.
WA's Labor government passed emergency legislation in 2020 terminating arbitration with Mr Palmer and his firms over the project and preventing the state from having any liability towards the billionaire in related disputes.
The law prevented Mr Palmer from suing the WA government for $30 billion in damages.
Mr Palmer and his companies are believed to be seeking ten times that amount under the international arbitration process which alleges breaches of the ASEAN-Australia-New Zealand free trade agreement.
Former attorney-general Christian Porter is reported to be among Mr Palmer's team of lawyers.
The mining magnate on Thursday said any windfall from a future lawsuit would be spent on improving WA's hospitals and funding a new daily newspaper for the state "which doesn't rely on cartoons to sell copies".
"A better health system and new independent voice for WA citizens is desperately needed," Mr Palmer said in a statement.
Mr Palmer's challenge of the emergency WA legislation was dismissed by the High Court in 2021.
Assistant minister Patrick Gorman said the federal government would contest what he described as a "nuisance" lawsuit.
"This is $300 billion we're talking about," he told Perth radio 6PR.
"We've already got a trillion dollars of debt, the last thing Australia needs is more debt and taking taxpayer money and putting it into Clive Palmer's pocket.
"This is a lawsuit we will have to vigorously defend."
Prime Minister Anthony Albanese made light of the lawsuit during parliamentary question time.
"Knowing Clive Palmer's record for paying his workers, I hope Christian Porter asks for his money up front," he said.
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