The Beatles legend, who is currently embroiled in a bitter divorce battle with Mills, is said to be fuming after she attacked him on several UK and US TV shows and has now offered her just £7 million.
A source said: "The war between them has just gone to a new level. Paul knows she will go all out to damage his reputation."
During her TV outbursts, Mills blamed McCartney for the breakdown of their marriage, claimed she felt suicidal and persecuted since receiving death threats, branded McCartney's daughter Stella "evil" and likened herself to the late Princess Diana.
Mills was dropped by her legal team Mischon de Reya following her rants, and she will now represent herself at the next divorce hearing in February.
McCartney is convinced Mills' TV appearances have weakened her case and he is confident he can thrash out a £7 million settlement.
However, Mills is planning to hit back by selling 10 explosive secret tapes she made during their marriage.
The 39-year-old vegan - who lost her left leg below the knee following a motorbike accident in 1993 - reportedly has recordings that prove McCartney accepted blame for the breakdown of their marriage, took Viagra pills to spice up their sex life and mocked her disability.
Meanwhile, McCartney is planning to confirm he is dating Nancy Shevell when they attend Harvey Weinstein's wedding together next month.
Movie mogul Weinstein will marry British fashion designer Georgina Chapman in Connecticut on December 15.
McCartney was first linked to the married millionairess after they were photographed kissing in the Hamptons last month.
The pair spent the weekend in the exclusive New York resort, having dinner, enjoying cocktails and visiting each other's mansions.
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