Lee said the defendant, Roy Ngerng, had been "insincere" in his apologies and continued to worsen his original libel by repeating false allegations in blogs and a YouTube video clip.
Lee sued Ngerng in May 2014 after the blogger accused him of misusing public funds, a sensitive issue for officials in the city-state known to have the least corrupt government in Asia.
"You have defamed me," Lee, 63, firmly told Ngerng from the witness stand at one point during a cross-examination at the High Court punctuated by testy exchanges, sarcasm and some amusing ripostes.
The court had already ruled that a blog posted by Ngerng on May 15 last year was defamatory. The latest hearing, slated for three days, is being held to assess how much money should be awarded to Lee, including aggravated damages.
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Lee's lawyers said the offending blog suggested that the prime minister, who is also the chairman of state investment fund GIC, had misappropriated cash from the state pension fund.
Lee filed the defamation suit -- the first brought by a Singapore leader against an online critic -- in the High Court, where the typical minimum value of damages claims is USD 200,000.
The activist today told the court he accepted the judge's earlier ruling that his original post was defamatory, but tried to prove an absence of malice.
He reminded Lee that he had issued several letters of apology and asked the prime minister if he would give him a second chance.
The Singaporean leader however said Ngerng's conduct showed he was not sincere.
Lee also rejected Ngerng's assertion he was being persecuted politically for raising questions about the Central Provident Fund (CPF), saying the activist and other Singaporeans were free to discuss the issue.
He said he only decided to sue Ngerng when he read his May 15 post and after consulting his lawyers.