The challenge will be heard in the European Court of Justice. Mr Lilley claims the Commission exceeded its authority in committing the spending without permission of member states after the blocking of an earlier programme in the Council of Ministers by Germany and the UK.
He said in a Commons written reply that he has "this week made an application to the European Court of Justice challenging the legal basis of this expenditure. "We believe other member states share our concern."
He insisted: "The challenge is not aimed at stopping sensibly planned funding in support of disadvantaged people. The Government is already funding many projects to combat social exclusion in the UK through inner city challenge, adult training, health care, housing and literacy programmes."
The Social Security Department disclosed that the Commission plans involved 86 projects, 10 of which were in the UK. These included young persons' inner city task forces, a literacy programme in Wales and a debt line in south London.
A spokesman said that of the Commission's pounds 100m spending, Britain would pay pounds 5m.