Burrell denies Diana allegations

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In a statement, Ron Cosgrove - whose sister Maria is married to Mr Burrell - asserted that he had sold the story to the News of the World in a bid to make her "wake up".

The paper reported how Mr Burrell, 50, boasted to Mr Cosgrove that he was Diana's lover during a conversation in a pub in Cheshire in 1993 and again a year later at a family party to celebrate Mrs Burrell's 40th birthday.

Mr Burrell, who worked for Diana until her death in 1997, refuted Mr Cosgrove's claims and denied he ever had a sexual relationship with his employer.

His wife also backed him, saying she was "hugely embarrassed" by her brother's comments.

The couple, who now spend most of their time in the US, suggested that Mr Cosgrove, 61, may have decided to "invent" the story after they recently refused a request from Mr Cosgrove for money.

But Mr Cosgrove said he stood by "every word" and was willing to recount his testimony under oath.

"I can understand my sister being upset at these revelations and it has never been my intention to cause her any distress," he said. "I have simply told the truth in my interview with the News of the World and I stand by every word I said.

Denying the story, Mr Burrell said he was "sad and hurt" by Mr Cosgrove's claims and said there was "not one one shred of truth to any of the claims pertaining to my service with either the princess, or Her Majesty the Queen".

"Myself and my wife Maria feel tremendously sad and hurt that he has resorted to such vengeance by way of response," Mr Burrell said.