Mohammed al-Fayed's barrister today accused the most senior police officer in Britain at the time of Diana, Princess of Wales's death of being part of a murderous conspiracy.

Speaking at the inquest into the Princess's death, Michael Mansfield QC suggested that Lord Condon, the former Metropolitan Police commissioner, deliberately covered up evidence because he knew Diana had been killed by the activities of “British state agencies”.

Lord Condon told him the allegation was “abhorrent” and “disgusting”, saying it amounted to calling him a murderer.

The extraordinary exchange happened during cross-examination at Diana’s inquest about the so-called “Mishcon Note”.

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The document records a meeting with Lord Mishcon, Diana's lawyer, in 1995 at which she spoke of fears that somebody would arrange a car crash for her.

The lawyer, who has since died, handed the letter to Lord Condon 18 days after the 1997 crash in Paris in which Diana was killed, with Dodi Fayed and driver Henri Paul, the High Court inquest heard.

The letter was not passed on to Michael Burgess, the Royal Coroner, until 2003 after a similar letter was made public by Paul Burrell, Diana's former butler, the jury were told.

Mr Mansfield put it to Lord Condon that he had a legal duty as early as 1997 to pass on anything “germane” to the case to the relevant coroner.

He continued: “I’m going to make it plain to you, Lord Condon, that the reason why potentially relevant material was not handed to the coroner immediately and in fact not at all, until Paul Burrell put his letter in the public domain ... was that you were sitting on it knowing that something had gone wrong in Paris linked to the work of British state agencies.”

The coroner Lord Justice Scott Baker interrupted asking: “You are suggesting, are you, that Lord Condon was part of a criminal conspiracy?” Mr Mansfield said: “Yes.”

Lord Condon replied: “That is about the most serious allegation that could ever be made of someone in my position and I totally refute it as a blatant lie.”

He went on: “I find the suggestion, though I respect your right to raise it, as totally abhorrent, offensive and would actually mean that I’m a murderer in essence, part of a murderous conspiracy.”

He went on: “I find that a disgusting suggestion, I know why you have to raise it, but I am on oath, my whole life has been conducted to telling the truth on this sort of issue and I can swear on oath to the jury that that is a blatant lie.

“There is not one iota of truth in what Mr Mansfield is suggesting."

Diana, Princess of Wales, died with her companion, Dodi Fayed, following a car crash in Paris in 1997. The inquest into her death continues.

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