The Whitehall mole revelling in Jacqui Smith's discomfort

When Jacqui Smith was forced to stand up in the Commons and make a humiliating apology over her use of the Commons expenses system this week, one of her former employees took even more interest in the embarrassing admission than most.

For Chris Galley, it represented a remarkable turnaround in his fortunes and a personal victory over the former home secretary. It was little more than six months ago that Ms Smith's Home Office sacked Mr Galley after he was arrested and exposed as the Whitehall mole who had leaked a string of politically explosive stories about the department.

The fallout from his handiwork, including a police raid on the offices of the Tory frontbencher Damian Green, and the departure of the Speaker, Michael Martin, left him down and out. Even the Conservatives, the party for which he had lost all in order to help, cut him loose.

But after a brief stint in the wilderness, the man who once tried to bring down Ms Smith from within the corridors of power has returned to play a key role in her new difficulties.

While her apology was ordered by the Commons Standards and Privileges Committee, the seven-month investigation into her use of expenses began after a complaint from the pro-transparency group, the Sunlight Centre for Open Politics. It alleged that by wrongly listing her sister's London property as her main home, she was able to claim £116,000 for her constituency home in Redditch. When the complaint was upheld, the centre's director, one Chris Galley, was delighted.

He insists that the fact that he again finds himself pitted against Ms Smith is not the actions of an embittered former employee, but is purely a coincidence. "It just happens to be her," he said. "We will only go after MPs who we think have serious questions to answer."

Mr Galley is not letting Ms Smith off with an apology. The institute is now putting pressure on her to pay back more than £42,000 in expenses it says she claimed after 2007, when she began spending even more time in Redditch.

"It's for things like patio heaters," Mr Galley said. And he has an even more ambitious plan to bring down his former boss – he is attempting to launch a private prosecution against her over her expenses claims.

"These things are always expensive, but hopefully we can get this to court," he said.

"If we can do that, I am quite happy that a jury would be convinced that there is a case to answer."

The stakes are high. If the case even makes it into the judicial system, it would be hugely embarrassing not only for Ms Smith, but for all MPs desperately hoping to move on from the expenses scandal.

"We are hoping to use this as a test case that others will be able to use against more MPs in the future... who are guilty of acting unscrupulously," Mr Galley said. He has raised about £15,000 for the "Bring Jacqui to Justice" campaign, but needs around £100,000 to proceed with the prosecution.

His return to the spotlight was facilitated by the political blogger Paul Staines, aka Guido Fawkes, who brought about the end to the career of one of Gordon Brown's most senior aides, Damian McBride, by exposing the now infamous "smear emails" in which the special adviser had dreamed up untrue stories about several Tories. Having read about Mr Galley's plight and how he was cut adrift by the Tories, Mr Staines invited him to join the Sunlight Centre, which he set up last July.

"He was treated badly," Mr Staines said. "We had a drink to discuss it first and he began as director in June." According to Mr Galley, the pair are kindred spirits: "We share views on transparency and Government, and it started from there."

Ms Smith looks set to fight on for Labour, but with a group of angry voters and a small majority of just 2,716, it could well be Mr Galley who has the final word.