Unmasked: The vice girl who taped the orgy explains why she feels sorry for Mosley's wife

The blonde wife of an MI5 officer - known during Mr Mosley's privacy case against the News of the World as Woman E - was paid by the newspaper to record spanking and bondage sessions he enjoyed with her and four other women.

But she failed to give evidence during the fortnight-long hearing at the High Court because of her ' emotional and mental state'.

Speaking out: An emotional Woman E on television last night

The woman emerged from hiding last night to give an interview to Sky News

She refused to give her full name although her face was clearly seen.

Using the name 'Michelle', she said that she felt sympathy for Mr Mosley's wife of 48 years, Jean.

'I feel really sorry for her and her family, of what they have gone through, it must have been absolutely devastating,' she said.

'She didn't ask for this and I am very, very sorry that it came out how it did.'

Michelle, who has previously posed for pictures as a 'dominatrix', said the Formula One boss had acted as an inmate in a German prison scenario where other women wore German uniforms, but denied the News of the World's claim that there were Nazi overtones to the sex sessions.

She said the antics were like a 'German prison scene' and added it involved 'lice inspection, this that and the other, measuring him up for his uniform, that sort of thing'.

She added: 'I know for a fact that it was spoken about that Max actually found it quite a turn-on to speak to them in German. He liked the German language.'

'Woman E', speaking to Sky News. She expressed sorrow at the amount of pain caused and said she was 'happy' at the outcome of the case

She said she had been ' stupid and naive' to set up 68-year-old Mr Mosley, adding: 'I would just get on my knees and apologise, to be honest, and just say that I am so sorry for everything that has happened and what has been caused. I didn't think about what I was doing, I was stupid, naive certainly and I wish I had never done it.'

Woman E feels responsible for the pain caused to Max and Jean Mosley's marriage

Michelle, a mother of two, added: 'It was absolutely terrible, it was really difficult to do. Mainly because you are feeling a nervous wreck, you are doing something you shouldn't be doing and obviously it wasn't very nice at all. It was a horrible situation.'

On Thursday, Mr Mosley - son of the 1930s fascist leader Oswald Mosley - was awarded £60,000 damages for invasion of privacy. Legal experts have said the 54-page ruling, delivered by Mr Justice Eady, could have major implications for Press freedom and investigations into the rich and famous.

It has been seen as evidence that a privacy law has been brought into British law via the back door.

The court heard that Michelle was paid half the £25,000 the newspaper promised for the story, but she also saw her husband lose his job after he was revealed to be an MI5 employee.

During the hearing Mr Mosley said he paid £2,500 for the sex party in a London flat, each woman receiving £500.

The revelations still threaten Mr Mosley's position as head of the prestigious FIA motorsport organisation.

Yesterday he launched libel proceedings against the News of the World.

His solicitors said: 'Following his successful privacy claim, and attempts by the editor and staff of the News of the World to devalue the outcome of that claim, Mr Mosley will now be pursuing a claim for damages and aggravated damages.'

The News of the World said last night that it had believed the orgy had Nazi overtones when it published its story.

'Woman E's signed witness statement said not only was she told to expect a German theme to the party with Mr. Mosley, but also that she was told that Mr. Mosley had asked for a German Nazi style scene,' News of the World spokesman Hayley Barlow said in a statement.

'This is what the News of the World believed was the position.'

She said the News of the World now accepted the court ruling that there was no Nazi theme in the sex games.

In Germany, a £1.2million lawsuit was filed against the publishers of Bild, the country's largest newspaper, claiming breach of trust, violation of copyright laws and fraud.