In a statement, Ms Arnold said she had issued defamation proceedings in the High Court at Wellington on Tuesday, retaining defamation specialists Peter McKnight and Ali Romanos to act for her.
She claims Mr Shadbolt defamed her in a series of columns in The Southland Times between October last year and April this year.
Ms Arnold said it was ''clear her willingness to challenge council consultation and decision-making processes had put her offside with the city's power brokers''.
''That includes the mayor, who has used the privilege of a fortnightly column ... to make his displeasure clear.
''It is with considerable reluctance that I have issued these proceedings, but I cannot leave Mr Shadbolt's attack on my reputation to remain unchallenged.
''I am also conscious that Mr Shadbolt has threatened to sue me if I took action against him.''
Ms Arnold, who worked for The Southland Times and Sunday Star-Times, has also named her former employer, Fairfax Media, as a defendant in the claim. Mr Shadbolt could not be contacted for comment yesterday.
