Dawesville MP Zak Kirkup has hit out at Premier Mark McGowan's decision to use taxpayer money to sue Clive Palmer.
Mr McGowan has filed a counter-claim in the Federal Court alleging his reputation has been injured by public comments made by Mr Palmer.
He defended the taxpayer-funded defamation claim, saying any benefits will flow to the state.
But Mr Kirkup, as spokesperson for the Opposition, said the Premier shouldn't be using taxpayer dollars to defend his own reputation.
"I didn't realise that we elected a princess at the 2017 state election," he said.
The billionaire mining magnate last month filed paperwork in the NSW registry of the Federal Court alleging he had been defamed by Mr McGowan.
It comes as the two parties prepare for a High Court showdown in November over the constitutional validity of the state's border closures.
Mr Palmer is also seeking almost $30 billion in damages over a decision by the former state government not to assess one of his mining projects.
The pair have engaged in a bitter slanging match in recent months, while Mr Palmer has launched radio and TV advertisements targeting Mr McGowan.
The premier on Wednesday said he had been advised to launch the counter-claim and confirmed WA taxpayers would foot the bill for his private lawyer.
Read more: WA premier says Palmer is an 'egomaniac'
"Any money that comes out of this defamation proceeding will go directly to the state," Mr McGowan said.
"The taxpayers will be a winner, if you like, out of Mr Palmer's very defamatory comments that he's made.
"This is not of my choosing. I didn't want any legal actions."
Mr McGowan said he was confident the claim would be resolved in his favour, declaring WA taxpayers should expect "a big cheque".
A case management hearing for the defamation matter is listed for October 13.
Read more: WA 'at war' with Clive Palmer over borders
The premier said the WA government had been forced to defend eight matters before the courts involving Mr Palmer.
Another case being heard in the Queensland Supreme Court relates to extraordinary legislation passed by WA's parliament aimed at blocking Mr Palmer's damages claim.
Chief Justice Susan Kiefel is expected to hear Mr Palmer's High Court claim against WA's border closures in early November.
with Australian Associated Press