Latham cleared for unpaid mobile phone traffic fine

Mark Latham's legal challenges have been lightened after an unpaid traffic infringement was withdrawn in a Sydney court.

Transport NSW dropped the charge of using a phone while driving on Monday after the court received a letter from the department, the contents of which were not disclosed.

The upper house MP did not show up in court, but lawyer Danny Eid said his client was relieved with the outcome.

"They've considered that very closely and they've determined that the most appropriate course is to withdraw, and I tend to agree," he said outside court.

The 62-year-old former federal Labor leader turned conservative agitator was allegedly detected using his mobile illegally while driving near a phone detection camera.

Mr Latham is separately gearing up for a Federal Court battle after independent MP Alex Greenwich promised to file a defamation suit this week.

Mr Greenwich said he was defamed, made out to be a danger to children and subjected to repeated attacks based on his sexuality after Mr Latham posted a homophobic tweet in March.

Mr Latham, through lawyers, disputed his actions were defamatory.

"We'll definitely defend the defamation, that's an absolute try-on," Mr Eid said on Monday.

While Mr Latham deleted the tweet, he stood by the remark in a subsequent media interview.

Mr Greenwich's lawyer told reporters last week his client had experienced the damage of "very dangerous words" and was "constantly attacked" by people with prejudices towards the LGBTQI community and threats.

Mr Latham's tweet led to condemnation across the political spectrum and a promise from the state Labor government to refuse to deal with the One Nation leader.

Labor hasn't ruled out negotiating with the party's other two upper house MPs.

Mr Latham and Mr Greenwich have both referred each other to NSW Police alleging various posts might have breached online harassment laws.