The late Princess of Wales lived at 60 Coleherne Court, a property close to King’s Road in Chelsea, for three years before marrying Prince Charles.
She shared the flat with three friends from 1979 to 1981, including Virginia Clarke, who helped unveil the plaque in a ceremony on Wednesday.
“Those were happy days for all of us and the flat was always full of laughter,” Clarke said.
She added: “Diana went off to become so much to so many. It’s wonderful that her legacy will be remembered in this way.”
The blue plaque, placed outside the home, reads: “Lady Diana Spencer later Princess of Wales 1961-1997. Lived here 1979-1981.”
According to Andrew Morton’s 1992 book, Diana, In Her Own Words, the Princess of Wales described her years at the flat as “the happiest time of her life”.
She told Morton: “It was nice being in a flat with the girls. I loved that – it was great. I laughed my head off there.
“I kept myself to myself. I wasn’t interested in having a full diary. I loved being on my own, as I do now – a great treat.”
While she lived there, she worked as a nanny for a woman named Mary Robertson. In 2017, Robertson told Inside Edition that Diana was “wonderful” with her son.
According to English Heritage, Diana remained at Coleherne Court until the night before her engagement to Charles was announced to the public in February 1981.
English Heritage said it had chosen to recognise Diana’s charitable efforts now as she would have celebrated her 60th birthday this year.
The Princess of Wales died in a car crash in Paris in 1997, aged 36.
Anna Eavis, curatorial director at English Heritage, said it was fitting that a blue plaque remembers her at the “place where her life in the public eye first began”.
“Diana was one of the world’s most famous women and she used her fame and influence to raise awareness of issues such as homelessness and landmines.
“She played a critically important role in helping to destigmatise illnesses such as HIV, leprosy and depression,” Eavis said.
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