BBC chair Samir Shah has said there is "no basis for a defamation case and we are determined to fight this" - after Donald Trump said he would sue the corporation for between $1bn and $5bn.
It comes after the US president confirmed on Saturday he would be taking legal action against the broadcaster over the editing of his speech on Panorama - despite an apology from the BBC.
In an email to staff, Mr Shah said: "There is a lot being written, said and speculated upon about the possibility of legal action, including potential costs or settlements.
"In all this we are, of course, acutely aware of the privilege of our funding and the need to protect our licence fee payers, the British public.
"I want to be very clear with you - our position has not changed. There is no basis for a defamation case and we are determined to fight this."
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On Saturday, President Trump told reporters legal action would come in the following days.
"We'll sue them. We'll sue them for anywhere between a billion (£792m) and five billion dollars (£3.79bn), probably sometime next week," he said.
"We have to do it, they've even admitted that they cheated. Not that they couldn't have not done that. They cheated. They changed the words coming out of my mouth."
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The BBC on Thursday said the edit of Mr Trump's speech on 6 January 2021 had given the "mistaken impression that President Trump had made a direct call for violent action".
The broadcaster apologised and said the splicing of the speech was an "error of judgment" but refused to pay financial compensation after the US leader's lawyers threatened to sue for one billion dollars in damages unless a retraction and apology were published.
The Panorama scandal prompted the resignations of two of the BBC's most senior executives - director-general Tim Davie and news chief Deborah Turness.
The broadcaster has said it will not air the Panorama episode Trump: A Second Chance? again, and published a retraction on the show's webpage on Thursday.
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