The newspaper said it has signed a deal with Boxtree to turn a series of articles into a book. But the publisher is playing down the newspaper's involvement and has heavily promoted the book - Diana, The Untold Story - at the London Book Fair, emphasising the Kay authorship.
The newspaper and publisher will meet next week to discuss how the book should be marketed for the launch on 10 July.
Among matters to be clarified will be the billing of Geoffrey Levy who was co-author of the series of newspaper articles. Mr Levy was not mentioned in a glossy brochure at the fair or in the publisher's catalogue.
Mr Kay is well-known as the princess's confidante, but has always been extremely sensitive about the friendship and his close relations with her family. He attended her funeral as a private guest and refused to write about it.
A book by him "unveiling the truth about her childhood, her ill-fated marriage to Charles, the men who came into her life..." in the words of the publisher's brochure, would be a publishing coup.
The catalogue says: "[Richard Kay] feels that his role remains to put the record straight about the life of the princess and describes a very different woman from the bitter bulimic portrayed in Andrew Morton's biography... From his special standpoint as Diana's mouthpiece, Kay tells the untold story".
A spokesman for the Daily Mail said last night that it was the newspaper's own venture and that it had received the pounds 50,000 advance, not Mr Kay, as The Independent has reported.
A spokesman for the newspaper said they had made a "staggeringly large cheque" to the princess's memorial fund, set up to raise money for her charities, when they had begun the Diana, The Untold Story, series. "If you rang up the memorial fund and asked them how they felt, they would eulogise about Richard Kay, Geoffrey Levy and the Daily Mail," the spokesman said.
The newspaper refused to say whether any of the proceeds of the book would go to the two reporters. But the spokesman said Richard Kay had received the information contained in the series as a Daily Mail reporter and that information belonged to the newspaper.
The book will bind together the 12-part series with an introduction. Adrian Sington, who signed the deal for Boxtree, part of the Macmillan group, said there would be a new 2,500-word introduction, but the Daily Mail insisted yesterday that the book would contain nothing which had not been published in the newspaper.
Mr Sington said he expected it to be a success: "We expect to sell an awful lot of copies. It happens to be an extremely good book, it's beautifully written and a great story."
No mention was made of the Daily Mail or Mr Levy in the information prepared for the London Book Fair because that was a rights fair for foreign buyers. Mr Sington said: "I haven't decided yet whether I'm going to call it a Daily Mail book."
Trustees of Diana's memorial fund last night refused permission for an American toy firm, Hasbro, to make a Sindy doll looking like the princess.