The so-called 'Squidgy' conversation between Princess Diana and her close friend James Gilbey was recorded by the British secret services, the inquest into her death has heard.
In another day of drama at the High Court, Ken Wharfe, Diana's former bodyguard, said the British intelligence station GCHQ, listened to the intimate chat as part of a general policy of tapping the royal family's phones.
The former protection officer - who headed up the Princess' security detail from 1987 to 1993 – told jurors the bugging was to help guard against the threat then posed by IRA terrorists.
"It's my belief that GCHQ… were monitoring members of the royal family because of heightened IRA activity at the time," he said.
Asked how the conversation - in which Diana's friend called her by the nickname 'Squidgy' - was made public, the former Met policeman said that for some unknown reason it was leaked by GCHQ and picked up by radio enthusiasts.