The allegation surfaced in a cache of legal papers unsealed by a U.S. judge in a defamation case involving a British socialite alleged to have supplied Jeffrey Epstein with underage girls.
A former maintenance man of Jeffrey Epstein has claimed that he met "Princess Diana's secretary with her children" while working for the 66-year-old financier, who apparently committed suicide last week at New York City's top-security jail where he was awaiting trial on sex-trafficking charges, the Daily Mail reports.
A Buckingham Palace spokeswoman said: "This relates to proceedings in the United States, to which The Duke Of York is not a party".
Previously, it has been reported that Virginia Roberts Giuffre, who had alleged Epstein's former lover Ghislaine Maxwell of holding her as a teenage "sex slave" for Epstein, had alleged that she has had sex with Prince Andrew as a teen. "Any suggestion of impropriety with underage minors is categorically untrue".More news: Apple is shutting down features on iPhones with unauthorized batteries and repairs
Ms Giuffre had also claimed she was forced into a sexual encounter with the Duke of York.
A massive cache of documents unsealed by a USA court this month accused the Duke of having sex with a minor procured by Epstein. And so Andrew and Virginia sat on the couch, and they put the puppet, the puppet on her lap.
Ms Maxwell was alleged to have procured underage girls for her then-boyfriend Epstein and his wealthy friends, but she has always denied the allegations.More news: You never have to remember your passwords with Android from now on!
The legal papers also contain denials from other parties who have been caught up in the case, including Donald Trump, who was in a photograph with Epstein in the 1990s.
Another alleged victim, Jennifer Araoz, told CNBC: "I am angry Jeffrey Epstein won't have to face the survivors of his abuse in court".
"I've known Jeff for 15 years", Trump said in 2002 NY magazine profile, going on to call him a "terrific guy".
Police officers cover a medical examiner vehicle outside New York Presbyterian-Lower Manhattan Hospital where Jeffrey Epstein's body was transported.More news: Mu Jung Hur wins Ladies Scottish Open