Mr Campbell said that at the time alleged, while he was political editor of the Daily Mirror, he had actually been in a briefing with the Prime Minister's then press secretary, Gus O'Donnell.
He was giving evidence in a case brought by Torbay Tory MP Rupert Allason, who is suing Mr Campbell, former Mirror journalist Andy McSmith, and Mirror Group Newspapers for malicious falsehood over an article in November 1992.
Mr Allason, who is representing himself, says the story falsely claimed that 50 MPs signed an Early Day Motion suggesting he hand over part of substantial libel damages he had previously won from Mirror Group to Maxwell pensioners facing financial ruin.
Mr Campbell, who said the article was published at a time of flux at the Mirror Group, denied an earlier claim by Labour MP George Galloway that he saw the journalist trying to persuade a new MP to sign the motion.
"It is untrue and physically impossible, I did not go to that part of the Commons," said Mr Campbell. "The Prime Minister's press secretary wanted to have a private word with me about what was going on at the Mirror. He was extremely supportive and said the Prime Minister was taking an interest."
Mr Campbell dismissed suggestions he had initiated the EDM or was involved in writing the story, saying the first he knew of it was when his deputy, David Bradshaw, told him as the story was being filed. "As far as I recall, I did not see the copy filed by David Bradshaw. He did not tell me the background."
He had spoken to the editor of the Mirror about it, but this was "routine" because it was a story involving the newspaper. Mr Campbell denied any malice or vendetta against Mr Allason, whom he said he tried to ignore as much as possible. Far from attacking the MP, he himself had been misled over the authorship of the EDM and pressed for a correction.
Earlier, Mr Bradshaw had admitted coming up with the idea for the EDM, a draft of which he passed to two Labour MPs, who amended it and circulated it amongst colleagues.
He also admitted that at the time he had not told the whole truth about the authorship, and had made an error of judgement which had "dragged Alistair Campbell's name through the mud."
Mr Allason claims the article was malicious and that he lost a $100,000 book contract as a result.
The case continues.