Diana "routinely bugged by GCHQ"

Princess Diana's telephone conversations were routinely bugged by British intelligence, her former bodyguard has told the inquest into her death.

Ken Wharfe guarded the princess for seven years until 1993 and claims the controversial "squidgygate" tapes were the work of GCHQ (Government Communication Headquarters).

The tapes recorded Diana talking to close friend James Gilbey, who repeatedly told the princess he loved her and addressed her by the nickname Squidgy.

Mr Wharfe claimed the recordings were broadcast over the airwaves for radio hams to pick up.

A retired bank manager later admitted recording the conversation made on New Years Eve in 1989 and selling it to a national newspaper.

Mr Wharfe told the inquest: "It's my belief this internal recording was probably made by GCHQ... they probably had a good reason for doing it."

When questioned further by Mr al Fayed's QC, Mr Wharfe said: "It's my belief GCHQ at that time were monitoring members of the royal family because of heightened IRA activity."

He revealed Diana told him the Queen was "unhappy" about the tape and ordered an inquiry into the incident.

He also claimed the Queen did not support Diana's work with HIV/aids supporters.

He told the inquest: "I think Diana was very angry and annoyed the Queen could not see what she was doing. She felt a member of the Royal Family should be involved with campaigns to find a cure for Aids."

Mr Wharfe also criticised the bodyguards who were with Diana at the time of her death and said they should not have played a "cat-and-mouse" game with the press.

© Independent Television News Limited 2008. All rights reserved.