The BBC has issued an apology for Martin Bashir's infamous 1995 Panorama interview with Princess Diana.

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The interview came under renewed scrutiny last year when the Dyson Report ruled it had been obtained using deceitful means, after false rumours were spread that Prince William's nanny Mrs Alexandra Pettifer – then known as Tiggy Legge-Bourke – had had an affair with Prince Charles.

And now Director-General Tim Davie has released a statement in which he offered a public apology to Prince Charles, Prince William, Prince Harry and Mrs Pettifer – with the BBC paying substantial damages to the latter.

The statement also promises that the interview will no longer be shown on the BBC or licensed to other broadcasters.

It reads in full: "Following publication of the Dyson Report last year we have been working with those who suffered as a result of the deceitful tactics used by the BBC in pursuit of its interview with Diana, Princess of Wales for the Panorama programme in 1995, including the matters that were mentioned in court today in respect of Miss Tiggy Legge-Bourke, now Mrs Alexandra Pettifer.

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"The BBC has agreed to pay substantial damages to Mrs Pettifer and I would like to take this opportunity to apologise publicly to her, to The Prince of Wales, and to the Dukes of Cambridge and Sussex, for the way in which Princess Diana was deceived and the subsequent impact on all their lives.

“It is a matter of great regret that the BBC did not get to the facts in the immediate aftermath of the programme when there were warning signs that the interview might have been obtained improperly. Instead, as the Duke of Cambridge himself put it, the BBC failed to ask the tough questions. Had we done our job properly Princess Diana would have known the truth during her lifetime. We let her, the royal family and our audiences down.

“Now we know about the shocking way that the interview was obtained I have decided that the BBC will never show the programme again; nor will we license it in whole or part to other broadcasters.

"It does of course remain part of the historical record and there may be occasions in the future when it will be justified for the BBC to use short extracts for journalistic purposes, but these will be few and far between and will need to be agreed at Executive Committee level and set in the full context of what we now know about the way the interview was obtained. I would urge others to exercise similar restraint.”

After settling her claim for defamation brought against the BBC, Pettifer said in a statement: “I am disappointed that it needed legal action for the BBC to recognise the serious harm I have been subjected to.

“Sadly, I am one of many people whose lives have been scarred by the deceitful way in which the BBC Panorama was made and the BBC’s subsequent failure to properly investigate the making of the programme.

“The distress caused to the royal family is a source of great upset to me."

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