Lord McAlpine said he wants to restore his reputation after Twitter users wrongly linked him to historical allegations of child abuse.
Speaking to Channel 4 News, he said, "Obviously I want to restore my reputation, but I also realise - because it happened to me - that you can get one call, you can get piece on a programme and all of a sudden this escalates to thousands and thousands of people who have this information".
"Two weeks ago I was living quietly in southern Italy gardening, passing my time of day. A retired figure who nobody heard of, nobody barely thought about and suddenly I find the whole world has collapsed on me".
The Conservative peer also said he was "in shock" following the BBC Newsnight report that sparked the false allegations.
Lord McAlpine said Newsnight did not contact him about the claims and that he was "amazed" the programme said it was unable to reach him by telephone.
More top news
David Cameron will be facing a hostile audience when he meets with leaders from the remaining 27 EU nations this week, writes James Mates.
Baroness Warsi warns reports of hate crimes are rising after a "divisive" EU campaign largely focusing on immigration spurred street abuse.
Labour has descended into crisis as several high-profile members of the shadow cabinet have quit in the past few hours. Here's who they are.