Coulson resigned from his position as Prime Minister David Cameron’s Downing Street communications chief in January.
He has since been arrested on suspicion of corruption and phone hacking and released on police bail until October.
A source said that papers were served at the High Court yesterday “regarding the termination of the payment for his legal action”.
News International declined to comment.
A spokesman for law firm DLA Piper, which represents Coulson, said: “We can confirm that proceedings have been issued.”
Despite resigning as editor of the now-defunct News of the World in 2007, Coulson has consistently maintained he had been unaware of the practice of phone hacking, claiming it was confined to one “rogue” reporter — former royal editor Clive Goodman.
Conservative MP Louise Mensch, a member of the culture, media and sport committee that grilled key News International figures over phone hacking, told Sky News: “There is a feeling that News Corporation shouldn’t be paying these fees. But then there is also contractual obligation and promises to employees.”
The Prime Minister has said he would make a “profound apology’ if it turned out Coulson — who has already been questioned by police — had lied to him about his involvement in phone hacking when he gave him the job of director of communications in 2007.
He had been hired six months after quitting as editor of the News of the World when Goodman and private investigator Glenn Mulcaire were jailed for their roles in the hacking scandal.
Last month it was reported that News International was paying DLA Piper for their legal advice to Coulson following his arrest.