Mr Thomson has repeatedly denied the charges despite multiple credit card receipts from escort agencies bearing his signature and phone records showing calls to the agencies from his mobile phone and hotel rooms.
He insisted on Monday that he was innocent and accused the nation’s industrial watchdog of bowing to political pressure.
The charges follow an extensive four-year investigation and could potentially render Mr Thomson ineligible to serve as an MP, though he is likely to try to hold out until the next election, due in 2013.
Mr Thomson, who has a wife and a young daughter, has come under intense pressure over the alleged use of hundreds of thousands of dollars of union funds to pay for lavish entertainment, travel and personal expenses.
Mr Thomson’s downfall could bring about the collapse of Ms Gillard’s government, which does not have a direct majority in the lower house.
Mr Thomson has been suspended from the Labor party and is now an independent but his vote is crucial to propping up the government.
The prime minister last week accepted the resignation of her scandal-prone Speaker, Peter Slipper, and was forced to replace him with a Labor MP, thereby effectively losing a lower house vote.
The national industrial watchdog, Fair Work Australia, is suing Mr Thomson over unauthorised use of union funds as well as cash advances of $102,337 (£65,000). The statement of claim filed in the Federal Court lists various escort services allegedly employed by Mr Thomson, including Young Blondes, Boardroom Escort Agency and a brothel called Tiffany’s.
He is also facing fines for a range of alleged misdemeanours during his employment as a senior union official.
Mr Thomson, who has previously claimed he was the victim of an elaborate set-up, said on Monday that Fair Work Australia had been “pressured” into going ahead with the court action.
“Clearly Fair Work Australia has felt pressured into responding this way given the political process which it is part of,” he said.
”Naturally I will vigorously defend these claims.” But the Opposition said the findings were “devastating” and that Mr Thomson may be ineligible to sit in parliament if the proceedings render him bankrupt.
Fair Work Australia based its action on a series of investigations which were completed earlier this year.
“I just trust that Mr Thomson doesn’t use any delaying tactics, but I fear that he will seek to delay matters until the next election at least,” said an Opposition MP, Eric Abetz.
The court proceedings are likely to begin in December but the case and any appeals are unlikely to be finished before the next election.
State police forces have reportedly been investigating the alleged misuse of union funds but are yet to decide whether to press charges.
The federal prosecutor’s office said earlier this year it could not press charges based on Fair Work Australia’s findings because the watchdog had not conducted a criminal investigation.
