An American tabloid magazine quoted Michael Lohan as saying his strapped-for-cash 26-year-old daughter is now 'getting paid to date rich men'.
But the 52-year-old, who is notorious for seeking press attention, insists the comments were fabricated.
Michael told TMZ: 'By absolutely no means did I ever make such a statement ... ever!
'Sure, Lindsay and [other celebs] make personal appearances and get paid for it! Sure, she and they get paid to go to birthday parties and other occasions! But for sex? Are you kidding me?
'I would never say that because she would never do that and it never happened!'
The troubled starlet - who is set to appear in court in Los Angeles on January 30 after her probation was revoked because she allegedly lied about being the driver during a car accident in June - is said to have been hired to date rich men for several days, during which she is showered with lavish gifts such as jewellery.
One alleged client is the third in line for the throne of Brunei, who allegedly paid Lindsay $100,000 to celebrate New Year's with him in London.
Lindsay is in financial dire straits as a result of a huge tax bill, ongoing legal troubles and her flailing acting career.
It was recently revealed she was paid just $100 a day to star in The Canyons and equal share of the profits.
But it's unlikely the low-budget independent film, which features porn star James Deen, will be a big money spinner for her given it has just been rejected by the Sundance Film Festival.
Lindsay has received a few lifelines though - she was given $100,000 by her Scary Movie 5 co-star Charlie Sheen last year to help pay off her tax debt.
Daddy dearest: The former child star with Michael Lohan and mother Dina in 2003