A Russian diplomat is squatting on a site where his country was blocked from building an embassy just 500 metres from Parliament House in Canberra.

It came as Moscow officially launched legal action to fight the ban, enforced under legislation rushed through federal Parliament last week.

The Russian embassy lodged a High Court challenge to the decision on Friday afternoon. A spokesman for Home Affairs Minister Clare O’Neil said the Russian Federation had informed the Commonwealth it planned to challenge the legislation on constitutional grounds.

“Russia’s challenge to the validity of the law is not unexpected, this is part of the Russian playbook,” the spokesman said.

Back at the Yarralumla site, Australian Federal Police officers are watching the man. They are unable to arrest him ­because he has diplomatic ­immunity, The Australian reported on Friday.

The man has been staying in a portable building on the otherwise vacant construction site for up to a week.

Ahead of the Russian court battle emerging, Prime Minister Anthony Albanese brushed off concerns about the embassy site squatter on Friday.

“The national security threat that was represented by a Russian
embassy onsite is not the same as some bloke standing on a blade of grass. We don’t see as a threat to our national security,” he said.

Ms O’Neil said the national security concern was the proposal for a second Russian embassy “a stone’s throw from Parliament House”, on the prime Yarralumla block.

“We have dealt with the national security matter, as the PM has said. A bloke sitting on the site is not a national security threat to this country,” she said.

Mr Albanese chimed in: “Particularly when it is so cold out there.”

Opposition foreign affairs spokesman Simon Birmingham accused Mr Albanese of failing to take the issue seriously.

“He seems to want to cast it aside as a bit of a joke. Ultimately this is a simple case of whether the law of the land has been complied with and the Prime Minister should expect that to be the case in order to take that seriously,” he said.

“Every Australian expects Australian law to be upheld and be upheld fairly and equally for all. And we should not tolerate anybody seeking to make any type of fool of Australia in relation to the application of Australian law.”

Moscow reacted with fury to last week’s ban, labelling it “hysteria”.

Kremlin spokesman Dmitry Peskov accused the government of “Russophobic hysteria”. He labelled it “another unfriendly display from Australia”, and threatened retaliation.

Last week Mr Albanese said the government had received “very clear security advice as to the risks presented by a new Russian presence so close to Parliament House”.

“We are acting quickly to ensure the lease site does not become a formal diplomatic presence,” he said.

Russia’s existing embassy in the inner-south Canberra suburb of Griffith is not affected by the decision.

The National Capital Authority granted the lease for the Yarralumla site in December 2008, and building approvals followed in 2011.

Quizzed on Friday about why the initial lease was granted, Mr Albanese said he wasn’t responsible for decisions made in 2008.

“But the world was different in 2008 as well, it was a different time,” he said.

“We anticipated that Russia would not be happy with our response. We expected that, but we’re confident of our position, and processes are underway for the Commonwealth to formalise possession of the site.”

Under the lease conditions Russia had agreed to finish construction within three years, but it remains partially built.

-with AAP