Google introduced a new tool called Link Disavow tool on October 16, 2012. This will solve the issues of unnatural links pointing your site.
If you have any link spam in your site, web master tool shows you any message about “unnatural links” pointing you site. Then the Google sends a message to you according to the quality guidelines. If you get this message, that means to remove unrecompensed or low –quality links to your site as much possible.
This is addressing the problem in correct point of you, if you remove the bad links, it will help to the Google to taking the action again in the feature and also protecting your side.
“If you’ve done as much as you can to remove the problematic links, and there are still some links you just can’t seem to get down, that’s a good time to visit our new Disavow links page.” Google says
When you open the Disavow links page, first select your site. Then it will ask you to upload the file which contains the links you want to disavow. This file need to be a text file with one URL per line and the file size limit is 2MB
If you want to cross check the bad links in your site, “links to your Site” feature in webmaster tool is the best place. In webmaster tool home page, select the site you want, navigate to traffic> links to your Site> who links the most> More, than click the download button. Also download the recent links by clicking the “Down load latest links”.
In Google official blog post about the tool, Google includes a Q&A section. In that Google official response for one question “Can this tool be used if I’m worried about “negative SEO”?”
“The primary purpose of this tool is to help clean up if you’ve hired a bad SEO or made mistakes in your own link-building. If you know of bad link-building done on your behalf (e.g., paid posts or paid links that pass PageRank), we recommend that you contact the sites that link to you and try to get links taken off the public web first. You’re also helping to protect your site’s image, since people will no longer find spammy links and jump to conclusions about your website or business. If, despite your best efforts, you’re unable to get a few backlinks taken down, that’s a good time to use the Disavow Links tool.
In general, Google works hard to prevent other webmasters from being able to harm your ranking. However, if you’re worried that some backlinks might be affecting your site’s reputation, you can use the Disavow Links tool to indicate to Google that those links should be ignored. Again, we build our algorithms with an eye to preventing negative SEO, so the vast majority of webmasters don’t need to worry about negative SEO at all.”