Singapore Prime Minister Lee Hsien Loong wants to avoid legal action against his brother and sister over allegations of having abused his power in a dispute over their late father's house, he told parliament on Monday.

Lee was speaking in the city-state's parliament before fielding questions from lawmakers in a special sitting on the issue.

Lee said he would have sued in normal circumstances, before explaining that any such action would "further besmirch my parents' names" and drawn out legal proceedings would distract and cause distress to Singaporeans.

"Therefore, fighting this out in court cannot be my preferred choice," the prime minister said.