Royals in turmoil as humiliating allegations spread around the world

The future of Sir Michael Peat, private secretary to the Prince of Wales, was in question last night as the Royal Family and its senior advisers held an inquest into how damaging allegations about the Prince had been allowed to spread around the world.

It emerged yesterday that the Queen was consulted before Sir Michael issued a statement on Thursday evening, amplifying allegations which a Sunday newspaper had been forbidden from printing by an injunction taken out by a royal servant.

Questions are being raised among staff, courtiers and members of the Royal Family about why Sir Michael, an accountant by profession with little experience of handling the media, was allowed to embark on what has been described as a public relations disaster.

Today, the rumours continued to spread around the world both in Sunday newspapers and on the internet. A tabloid in Australia became the first English-language newspaper to publish explicit details of the allegation, while this morning's Sunday Tribune in Ireland also refers to the heart of the claim.

While Clarence House continued to insist that the Royal Family had done the right thing last night, Camilla Parker Bowles, the Prince's companion, is said to have had grave reservations about the decision "to go public".

Prince Charles, who sanctioned Sir Michael's decision to issue the statement and then appear on television, is today flying back from Oman into a deepening crisis.

The saga began last weekend when Michael Fawcett, Prince Charles's former valet, brought an injunction against The Mail on Sunday over an interview the newspaper was planning to publish with another former royal servant, George Smith. Mr Smith claims he was raped at the London home of a colleague working for the royal household.

The statement issued on behalf of Prince Charles by Sir Michael categorically denied the allegations. "The incident which the former employee claims to have witnessed did not take place," it said.

During the week, The Guardian successfully lifted a second injunction that had prevented it from naming Mr Fawcett as the person who had brought the injunction against The Mail on Sunday. Last night, a further injunction was brought against the title in Scotland. But while the news media in the UK continues to face restrictions, a tidal wave of fresh reports detailing them continued to spread both on the internet and in foreign newspapers.

The Mail on Sunday decided yesterday not to further contest the ruling. It is believed the newspaper originally intended to publish allegations about a "senior royal" and a member of staff without naming them. But the statement by Prince Charles, effectively identifying himself, had made that a much more difficult proposition.

Instead, the newspaper carries an interview with Mr Smith in which he says he stands by his account. In a new twist he alleges that he was threatened to keep quiet by a "hooded gunman" after Diana, the Princess of Wales, made it known that she had recorded his claims.

Meanwhile, The Sunday Telegraph reports that the heir to the throne is prepared to sue Mr Smith for breach of confidence.

A spokesman for Prince Charles said yesterday the heir to the throne was in "buoyant mood".

Charles Anson, the Queen's former press secretary, said: "I certainly know that she was consulted about the statement and as always takes a close interest in what is being said about members of her family. So I think she supports what's being done."

Clive Soley MP, a former chairman of the parliamentary Labour Party, said that the injunction had drawn public attention to allegations that might never have been published.

"I can understand the pain the Palace might feel, but in public life, you have sometimes got to grit your teeth," he said. "Generally it's better not to try to gag the press. If the story is wrong, you can sue for libel after it's printed."

But Edward Garnier QC, a Tory MP, leading expert on media and defamation law and a former shadow attorney general, insisted yesterday that Prince Charles's statement was the right decision.

He said any news organisation that now made such allegations without being able to substantiate them faced potentially massive claims for damages. "In those circumstances, it would be a deliberate untruth and the damages will be enormous," he said. "If they take this course, a paper can expect to be boiled alive by the courts."

Many constitutional experts, however, doubt whether Prince Charles would be prepared to take legal action to clear his name.