The controversial "Squidgygate" tapes were probably the work of the British intelligence listening station GCHQ which routinely bugged the conversations of Diana, Princess of Wales, her inquest heard.
The recordings of Diana talking on the telephone to close friend James Gilbey were probably made by the security centre and broadcast over the airwaves for radio hams to pick up, the Princess' former protection officer told the hearing.
Transcripts from the tape were published by a tabloid newspaper in 1992 and a phoneline was even set up so readers could ring in and listen for themselves.
Ken Wharfe, who guarded Diana for around seven years until 1993, told the inquest: "It's my belief this internal recording was probably made by GCHQ...they probably had a good reason for doing it.
"For some unknown reason this conversation is released on a loop to allow (radio hams) Cyril Reenan and Jane Norgrove to pick them up."
Questioned by Michael Mansfield QC, representing Mohamed al Fayed, about the bugging of Diana's telephone conversations the former protection officer replied: "It's my belief GCHQ at that time were monitoring members of the royal family because of heightened IRA activity at the time."
During the taped conversations Mr Gilbey is heard repeatedly affectionately calling Diana by the pet name Squidgy and telling her repeatedly: "I love you."
The tender words on New Year's Eve 1989 were uttered while the Princess was staying with the Queen at her Sandringham estate in Norfolk and her friend was at an undisclosed location talking on a mobile phone, the inquest jury was told.
Retired bank manager Mr Reenan later admitted recording the conversation using a radio scanner and selling it to a national newspaper.
He said he stumbled across the conversation by accident and recorded it to prove to his wife he had really taped Diana.
