The Prince of Wales's household is in panic as it tries to contain the repercussions of legal action by Michael Fawcett, a friend of the former royal aide said last night. Clarence House's decision to issue an extraordinary statement effectively naming the prince as the royal at the centre of lurid allegations has added fuel to the fire, said the source, who has spoken to Mr Fawcett several times this week.
What began with a single, unprinted tabloid article last weekend became a story of international proportions, encompassing debates over the freedom of the press and the future of the royal family, when on Thursday a judge lifted an injunction preventing the Guardian from identifying Mr Fawcett as the instigator of an injunction against a second newspaper.
"This was a good result for open justice," said Alan Rusbridger, the editor of the Guardian. "In the end, those connected with royalty will receive the same treatment in the courts as anyone else, and that's reassuring."
But it was a bad week for Clarence House, which may have inadvertently fuelled speculation by taking the extraordinary and unprecedented step of denying unspecified allegations which had not yet been printed and are widely considered to be at best ill-founded.
"I think it's a disaster - about the worst thing they could have done," said Mr Fawcett's friend. "They've poured paraffin on slightly dying embers... You don't kill a story by doing that, because there are too many unanswered questions."
Yesterday it also emerged that the prince's outgoing press secretary, Colleen Harris, had been forced to return this week, despite officially leaving her post.
Sir Michael Peat, the prince's private secretary, has said Prince Charles would not pay anyone else's legal fees. But the decision to issue the statement inevitably raises suspicion about Clarence House's role in Mr Fawcett's decision to seek the injunctions.
It is understood that Mr Fawcett would not have embarked on legal action without the support of Prince Charles or one of his senior advisers. But by Wednesday courtiers were convinced that the strategy was proving disastrous.
"One of the reasons Michael backed off the injunction route is that the palace started blaming him for everything going wrong this week," Mr Fawcett's friend said. "There's quite a hard view from the prince that Michael did the wrong thing going for the injunction. He feels very much on his own now. He feels he's got to do what's right for him now."
The storm began when the Mail on Sun day put its allegations to Mr Fawcett last Friday. According to its subsequent article, the story was based on lengthy interviews with another former royal servant.
Yet the next morning, when the paper's lawyers appeared at the high court to oppose an injunction, they indicated that the MoS did not seek to justify the allegations. That would make it more difficult to challenge an injunction, said Geraldine Proudler, a partner at the media law specialists Olswang. She said it could be argued that the fact the allegations had been made was in itself of public interest.
Yesterday the tabloid was still talking to lawyers about whether it could publish some of the original allegations this weekend. The terms of the injunction against it were varied after the Guardian's successful court action, but it is believed that the changes were extremely limited.
The article is thought to have raised rumours that had been aired many times in the past, and it is unclear why the tabloid hoped to publish them last week. While reporters there are understood to have been looking into Mr Fawcett's affairs, those inquiries are believed to be quite separate.
When the Guardian established that the man in question was Michael Fawcett, there appeared to be nothing to prevent the paper from publishing his name. The injunction referred solely to the MoS allegations, which the Guardian believed to be untrue and had no intention of repeating.
But to the astonishment of Mr Rusbridger, the Guardian was served with an injunction at 7pm on Monday night banning it from identifying him. Mr Fawcett's lawyers had contacted a duty judge by mobile phone as he sat in traffic and persuaded him to hand down the order. He did so without hearing the Guardian's side of the story.
When the case went before Mr Justice Tugendhat, a specialist in media law, on Wednesday, Mr Fawcett's lawyers were aggressive in their defence of the case for an injunction. But by Thursday morning there appeared to be a sea change in their approach. By 2pm, the judge had lifted the injunction and the Guardian was free to publish Mr Fawcett's name on its website. The story was immediately picked up by media outlets around the world.
It is possible that a witness statement from the Guardian's lawyer, served late on Wednesday night, played a part in the decision to seek an agreement with the paper. More pertinent, perhaps, is the rarity of preventing a paper from identifying someone who has brought an injunction when it does not seek to suggest that the initial allegations are true.
"If it was crucially important that he should not be identified to the public as the person who obtained the injunction, the court would have expected that to have been mentioned when he applied for the injunction," Ms Proudler said.
Mr Fawcett's highly regarded lawyer, Desmond Browne QC, is a specialist in media law and would know better than anyone how hard it would be to maintain such an injunction. Mr Fawcett is understood to have been concerned that his costs, estimated at around £20,000, were mounting; and had been warned that the issue had become one of press freedom. Other newspapers were entering the fray, with Thursday's Independent describing the injunctions as "draconian".
Moreover, the rumours had begun to surface on European websites and in a gossip email which circulates widely within the UK. That speculation, and the Guardian's court victory, appear to have prompted Clarence House's startling decision to call in camera crews from the BBC and ITN on Thursday evening to make a statement. Mr Fawcett's friend said: "They knew [the lifting of the injunction] would bring it right back to them because Michael's name would be in the public domain and everyone would be able to figure out which royal the story was about. It was a panic."
Friends of the royal family rule out any suggestion that the Queen intervened, and her former press secretary Dickie Arbiter told Sky News he believed it was "very much a Clarence House initiative". But it is unlikely to improve the monarch's relations with her son, which are said to be icy after the collapse of the prosecution of his former butler Paul Burrell.
Nor is she the only one to worry that the Prince of Wales has been damaged by the endless speculation about his household. Courtiers, including friends of the heir to the throne, have begun to drop hints to journalists about the "maturity" of Prince William and their belief that he would make an excellent king.
