Diana had been out to dinner with Mr Fayed, formerly heir to the fortune of Mohamed al-Fayed, the Egyptian owner of Harrods. The couple had been travelling in Diana's car, a blue Mercedes, just after midnight when the accident happened inside a high-speed road tunnel near the banks of the River Seine at Place de l'Alma in the capital's 8th district.
It appeared last night as if the couple might have been trying to avoid paparrazi who were pursuing them at high speed on motorbikes at the time.
The car was being driven by a security officer from the Ritz Hotel: he died when the car overturned several times after hitting the central reservation. It came to rest facing the wrong way against the tunnel wall with its horn blaring. Police cars filled the site outside the tunnel and officers blocked off the area.
French police said last night that five photographers had been arrested and were being interviewed, and motorbikes were being kept by the police. Witnesses said that one photographer was beaten up by a member of the public who arrived at the scene.
Diana's bodyguard was reported to have survived the crash, but was still being cut free from the wreckage at 3am this morning.
Diana was taken immediately to the Pitie-Salpetriere hospital in south- east Paris, and Sir Michael Jay, Britain's ambassador to Paris, went straight there. Her injuries were reported by French police to be "serious".
Tony Blair, the Prime Minister, was woken to be told of the accident and said that he was "shocked and saddened by what he sees as a devastating, appalling tragedy", said a Downing Street spokesman.
Robin Cook, the Foreign Secretary, said: "We are deeply shocked by the news and our first thoughts at the present time are with the princess and her family. Our ambassador is at the hospital and we will provide every possible assistance that we can.
"In the meantime, all I would add is that I think it would be doubly tragic if it does emerge this accident was, in part, caused by the persistent hounding of the princess and her privacy by photographers."
At first it was thought that Diana had suffered serious injuries but would survive. However, shortly before 5am London time there was a simultaneously- timed announcement of her death from Mr Cook in Manila, and the Paris authorities.
The Prince of Wales, who was at Balmoral with his two sons, was told about the accident. Mohammed al-Fayed was reported to be flying to Paris by helicopter. The Foreign Office confirmed that the French authorities had told them that paparazzi were involved in the accident. A spokesman said that the Foreign Office had been in touch with Buckingham Palace.
Diana, 36, and Al Fayed, 41, have been the focus of intense world media attention for the past month after photographs showed the two had become close on a Mediterranean holiday.
Diana was due back in Britain on Sunday after her latest holiday with Mr Fayed in the Mediterranean and had been expected to see her two sons, William and Harry, at her London home at Kensington Palace. On Friday tabloid newspapers splashed photographs of Diana and Al Fayed frolicking in the sea.
Since the breakdown of Diana's marriage to heir-to-the-throne Prince Charles, culminating in a divorce a year ago, she has been careful to keep any men friends out of the public eye.
It seemed, however, as if Diana was confident enough of the recent affair with Mr Fayed to allow it to become public
Some of the pictures taken of the couple on board a yacht last week showed that the couple were unconcerned about being seen together.
The liaison had already been taken as the prelude to a more stable romantic life for a woman whose emotional life has been turbulent for most of the past 16 years.
She has been associated with several men since she and the Prince of Wales separated, but none of the relationships had seemed to Royal commentators to be as promising as this. She once said in a BBC television interview that she wanted to be a sort of ambassador, "a queen of people's hearts" - an assertion born out of her sense of herself as a woman sensitive to tragedy.
Her childhood was overshadowed by the breakdown of her parents' marraige, and during the breakdown of her own she developed the eating disorder bulimia nervosa.Reuse content