Constable Terry Talbot said he saw the couple's vehicle pulled up in a dangerous place on a sliproad of the A1 near Borehamwood, Hertfordshire.
'As I approached I went up to the driver's window and I saw a woman wearing a green jacket with blonde hair lying prone across the Range Rover with her head in the driver's lap,' said PC Talbot.
'Her head was moving slightly up and down, the man was sitting with his eyes closed,' the officer told the jury, in the libel action brought by Miss Taylforth and Mr Knights against the Sun newspaper.
'I tapped on the window. The man looked to his right hand side and saw me and the woman returned to the driver's position.
'I did see for a fleeting moment that he was holding his erect penis with his right hand and trying to replace it inside his trousers,' said PC Talbot.
Miss Taylforth, who plays Kathy Beale in Eastenders, and Mr Knights, a businessman, are suing the Sun over a story which subseqeuntly appeared alleging that they had been indulging in a 'sex romp'. The newspaper denies libel.
The couple, both 38, of Highbury New Park, north London, say they were not having oral sex. Mr Knights suffers from pancreatitis, a condition brought on by drinking too much alcohol. They claim he had become ill after consuming champagne at a race meeting.
To ease the pressure on his stomach, Miss Taylforth undid his belt and pulled his trouser zip down.
Yesterday PC Talbot was adamant about what he had seen in June 1992.
He denied suggestions by Michael Beloff QC, for the plaintiffs, that he had 'jumped to a false conclusion'.
The case continues today.Reuse content