The Christian singer has launched legal action alleging there was collusion between the broadcaster and the force that led to the search appearing live on television.
BBC cameras watched on from a helicopter as police investigating allegations of historic sex offences searched Sir Cliff's apartment in Berkshire in August 2014.
The 75-year-old was named as being the accused but he was never arrested or charged.
The Crown Prosecution Service dismissed the case on grounds of insufficient evidence in June and both the BBC and South Yorkshire Police have apologised to the star.
However Sir Cliff said the "gross intrusion" into his privacy was the result of "illegal collusion" and the resulting fallout damaged his reputation and left him physically unwell.
The £1 million claim reflects damage he suffered personally and commercially as a result of the incident, he will argue.
It is understood Sir Cliff developed a cough which affected his touring schedule, an album release had to be delayed, sales of his popular calendars were affected and his winery business suffered.
Lawyers are understood to have written to the BBC and South Yorkshire Police to begin the litigation process.
The broadcaster, whose relationship with Sir Cliff stretches back decades, declined to comment. It previously said it was "very sorry" for causing the singer distress. Sir Cliff said the issue of whether the actions were justified or not was "important not only for me personally but much more widely".
He added: "My life was effectively turned upside down and my reputation, worldwide, was unnecessarily damaged. I would not want the same to happen to others whether in the public eye or not."
"Whilst the police of course need to properly investigate allegations made to them, it is clear to me that questions need to be answered by both the police and the BBC about their initial handling of my matter, which has rightly been condemned from so many quarters, including the Home Affairs Select Committee, the broader press, and, even the police themselves."
