Following are the latest developments in this story:
"How dare you try to conspire against me? If you have an anti-corruption bureau and police in Hyderabad, I also have my anti-corruption bureau and police in Hyderabad... I warn you not to cause tensions between the people of the two states," Mr Naidu dared Telangana Chief Minister K Chandrasekhar Rao or KCR at the public meet.
Responding to Mr Naidu, KCR said this evening, "Naidu did all that he did and claims we 'trapped' him. He doesn't want us to catch the thieves. Even Lord Brahma can't save you (Chandrababu Naidu)... Hyderabad does not belong to Chandrababu Naidu."
KCR's Telangana Rashtra Samithi has accused Mr Naidu of playing a role in the alleged attempt by a lawmaker of his party last week to bribe a nominated MLA Elvis Stephenson. A TV channel in Telangana has aired an audio recording of what it alleges is a conversation between Mr Naidu and Mr Stephenson. TNews is at least partly owned by the family of KCR.
Chandrababu Naidu's Telugu Desam Party says it's a conspiracy and that tapes have been doctored. Mr Naidu met Governor ESL Narasimhan yesterday evening, before the audio tapes became public, and alleged that the TRS government of Telangana is illegally tapping his phones and those of his ministers.
KCR's son and state minister KT Rao has dared Mr Naidu to face a lie-detector test. "Let Naidu take lie-detector test and prove to people that he is the squeaky clean person that he claims to be, that he is innocent," KT Rao said.
Since the bifurcation of Andhra Pradesh last year to form Telangana, the two states share a Governor and a capital in Hyderabad. Telangana's KCR too met Governor Narasimhan this morning. Both chief ministers and the Governor will visit Delhi this week.
At least three cases have been filed by TDP leaders against KCR in Krishna district alone; cases have also been filed also in Visakhapatnam, Suryapet and Nalgonda.
Last week, TDP legislator Revanth Reddy was arrested by the Anti-Corruption Bureau (ACB) after he was allegedly caught red-handed offering bribe to Mr Stephenson to influence his vote in the Telangana legislative council elections.The ruling TRS alleges that Revanth Reddy had the full backing of party president Chandrababu Naidu, whose TDP is in the opposition in Telangana. Telangana's Home Minister Nayani Narasimha Reddy has demanded that Chandrababu Naidu be "made accused number one" in the case.
In audio and video tapes released by the ACB, Revanth Reddy purportedly makes repeated references to his "boss". Mr Reddy allegedly also claims in the recordings that he was authorised to strike the bribe deal by "Babu Garu," which the TRS alleges is a reference to Mr Naidu.
Both the TDP and TRS accused each other of horse-trading for the legislative council elections held last Monday. The TRS won five of six seats and the Congress won one.