James Ashby is seeking court costs from the Commonwealth after dropping legal action against former parliamentary speaker Peter Slipper.

Ex-staffer James Ashby is pursuing the Commonwealth for costs after dropping legal action against controversial former Parliamentary Speaker Peter Slipper.

Mr Ashby announced last week he was ending legal action against the former Queensland MP over sexual harassment and breach of contract.

On Monday, Justice Geoffrey Flick formally stopped proceedings, subject to three orders.

Mr Ashby can take the Commonwealth to court over costs but cannot “undertake new proceedings” against Mr Slipper and the awarding of costs from an earlier Federal Court decision must be reconsidered, Justice Flick said.

The court heard the government would pay for Mr Slipper’s legal bills.

Mr Ashby issued a statement after Monday’s hearing, saying it is clear “the Commonwealth government is a major decider in how this case has progressed”.

“This is due to the fact that the Commonwealth government continues to fund Mr Slipper’s legal costs against me, and has been doing so since at least July 2013,” the statement read.

“We will be pursuing the Commonwealth for what are called third party costs.”

Last week, Mr Slipper said he was vindicated when his former staff member dropped his sexual harassment claim, describing the impact of the allegations as “immeasurable and irreparable”.

“The allegations brought by Mr Ashby have caused enormous personal stress … My mental illness is both ongoing and debilitating,” Mr Slipper said.

The legal stoush began in 2012 when Mr Ashby alleged sexual harassment from Mr Slipper, then the Labor government-appointed house speaker.

Federal Court Justice Steven Rares threw out Mr Ashby’s case in 2012, saying his aim was to perpetuate a political attack against Mr Slipper.

However, the full bench of the Federal Court in February overturned the decision on appeal, opening the way for Mr Ashby to continue his original lawsuit.

Mr Slipper, 64, faces three criminal charges relating to dishonest use of a taxpayer-funded Cabcharge in 2010.