Watford Football Club is to take legal action against the Watford Observer and former club employee Steve Simmons following publication of an article in last week's edition.

The club itself, chairman Graham Simpson and chief executive Mark Ashton have instructed top legal firm Mishcon de Reya to issue proceedings.

Chairman Graham Simpson said in a statement on the club's website: "This article was based on information from a disgruntled ex-employee and made sweeping, very damaging and inaccurate allegations which seriously questioned the integrity of our club and its Directors.

"This was made worse by the fact that the newspaper failed in its journalistic duty and responsibility to give us a proper opportunity to respond to the catalogue of damaging statements."

The club also plans to make a formal complaint to the Press Complaints Commission over the back page article, by journalist Kevin Affleck, which carried the headline 'Club chiefs under fire'.

Watford endured a torrid 2006/7 season and were the first team to be relegated, after just one season in the Premiership, following their promotion via the play-offs in May 2006.

Despite reaching the FA Cup semi-final, which they went on to lose against Manchester United, they were condemned to Championship football with three games remaining.

Management at the Observer declined to comment on the club's move.