The day after he arrived, in August 1990, the Iraqis invaded Kuwait and, soon after, the British broke links with the PLO. Although Mr Mellor frequently telephoned his office - he was then Arts Minister - he did not cut short the trip, his hostess, Mona Bauwens, told the jury.
Mrs Bauwens, 31, of Chelsea, west London, paid for the airline tickets for the Mellors from Heathrow to Malaga. She went on the same flights, with her three- year-old daughter and nanny, she told the court.
Mrs Bauwens' father, Jaweed al-Ghussein, the chairman of the Palestine National Fund and a member of the PLO's executive committee, had been considering joining the holiday, staying at a villa near by, but had cancelled the visit because of the invasion of Kuwait, Mrs Bauwens said.
Mrs Bauwens, an independent film producer, who agreed she and her father were both extremely wealthy, said at the time of her holiday she was no longer living with her husband, Arnold Bauwens, a Belgian. She has recently remarried. She is suing the People over two articles and an editorial published in September 1990, soon after the holiday.
Richard Hartley QC, for Mrs Bauwens, said the articles linked her with the PLO through her father and said the organisation had a history of ruthless and vicious terrorism. They suggested the PLO was capable of launching a terrorist campaign in the UK if war should break out with Iraq.
He said: 'The only inference is that no decent person should be seen in her company, let alone spend a family holiday with her. She is thereby labelled as a person to be shunned and avoided.'
She repeatedly told the court she was a pacifist and her father was against the invasion of Kuwait. His role in the PLO was nothing to do with her.
The People denies libel, claiming the articles were true and fair comment.
Mrs Bauwens, cross-examined by George Carman QC, for the defence, said she first met Mr Mellor at a Medical Aid for Palestine charity dinner in 1988. She met his wife, Judith, about a week later. Sometimes she saw a lot of the Mellors and their family, but there was no pattern to the relationship.
Mr Carman asked: 'Is it right Mr Mellor visited you on a social basis in the daytime without his wife?'
'Oh yes, he would drop round at Chesterfield House (her flat) and have a cup of tea or coffee.'
'Did you ever visit a flat provided for Mr Mellor in Kings Yard in Mayfair?' Before she could answer Mr Hartley objected to the line of questioning.
But Mrs Bauwens agreed that by the beginning of August 1990 their friendship had been close.
Mrs Bauwens said she had introduced Mr Mellor to her father after she had known him about a year. Mr Mellor met him when he visited Abu Dhabi and when Mr Mellor had gone to his mansion in Hampstead, north London.
Mr Mellor is expected to give evidence later in the trial, which resumes today.
(Photograph omitted)Reuse content