The action comes after Mr Craig announced at the July 29 media conference that he would sue Mr Williams, former Conservative board member John Stringer and blogger Cameron Slater for $300,000, $600,000 and $650,000 respectively.
At the conference he held up a booklet, titled Dirty Politics and Hidden Agendas, which he claimed outlined a "campaign of defamatory lies" against him.
Mr Craig said in the booklet he was releasing he outlined what he saw as the "strategy" to remove him as leader of the Conservative Party.
He has vehemently denied allegations against him, including sexual harassment, payouts against victims and sexually explicit texts. He has previously denied sexual harassment claims involving his former press secretary, Rachel MacGregor.
Mr Craig told the Herald he had not done anything wrong and was not worried about Mr Williams' legal action.
"Obviously it will go to our lawyers and it will be a two-way claim with Mr Williams. We are quite clear in having outlined what he has done wrong."
Mr Craig said he expected to lodge his own legal action imminently, and was still committed to it and the reasons he had given for it.
"We are in the process of compiling our claims. I mean we have such a vast amount of material that we have got to go through, particularly from Mr Slater and Mr Stringer.
"We haven't got an actual date by which we will file. Although I would expect it to be in the next week or two."
The details of Mr Craig's conduct with Ms MacGregor are suppressed by a confidentiality agreement. Despite both parties saying they wanted to waive the agreement, it still remains in place.
Mr Craig said he was still committed to removing the confidentiality agreement, but "we are probably still some way away from getting a decision on that".
After his resignation the party's board all but dissolved. The party is now attempting to elect new board members. Mr Craig said he would like to be reinstated as leader, but such talk was premature.
"That [the election of the board] is probably a two month process...my role is unknown at this stage."
Mr Williams said that "untrue and defamatory statements have been made about me and my conduct in relation to disturbing material I received relating to Mr Craig."
"Reputation is important to me so I take very seriously any accusations that I have acted improperly or dishonestly. Ongoing public smears left unchallenged can gain currency even if they have low credibility.
"I have made it extremely clear to Mr Craig that I have not made up any allegations or fabricated material, nor conspired to do the same with Messrs Slater and Stringer."
