"The matter is a political one and that is the arena in which it should remain. Your client has ample opportunity to answer questions about the issues in the public arena and to defend her actions, as I would mine.
"Suing political opponents who raise legitimate questions is no way to advance or resolve such and issue."
Mr Little also noted that he had received advice that Ms Collins would face "serious difficulty" if he took legal action against her for telling reporters that he had lied.
"She may care to reflect on that," Mr Little wrote.
Mr Mallard told APNZ this afternoon that he also intended to respond to the letter, but was still in the process of writing it.
"I'm absolutely indicating in the letter that in my view there is no defamation," he said.
Mr Mallard said he was "80 per cent sure" he would respond, and said it was the "polite thing to do".
When asked about the case by reporters today, Ms Collins repeatedly refused to comment.
The minister has continued to deny allegations from the opposition that she or her office was responsible for leaking an email sent to her by former National Party president Michelle Boag.
The email gave details about Bronwyn Pullar, the ACC claimant who went to the media last month after being mistakenly sent the details of almost 7000 ACC clients.
Privacy Commissioner Marie Shroff is investigating how the email got to the media, and Ms Collins has told Parliament she will resign if the leak is found to have come from someone in her charge.