BUCKINGHAM PALACE is urging the Prince of Wales to announce an unprecedented independent inquiry into the collapse of the Paul Burrell court case and claims of a cover-up over an alleged homosexual rape among the Prince’s staff.

The Queen has become exasperated by infighting at St James’s Palace over the past ten days and is anxious to limit the damage being inflicted on the Royal Family by the stream of allegations that has followed Mr Burrell’s acquittal of theft charges. The inquiry is expected to be announced today, with a senior figure such as Dame Elizabeth Butler-Sloss at its head.

It will be the first time an outsider has been brought in to examine a royal controversy and given the power to question both the Queen and the Prince. The inquiry will be held in private, but its conclusions will be made public. A Buckingham Palace official said: “The Prince has to ensure complete transparency. An independent inquiry is the only way.”

Yesterday Sir Robin Janvrin, the Queen’s principal private secretary, held a meeting with Sir Michael Peat, the senior official at the Prince’s court, after which Sir Michael drove from London to Highgrove to spend several hours discussing the situation with Prince Charles, Camilla Parker Bowles and Mark Bolland, the Prince’s media adviser. The Prince also had a separate private meeting with the alleged rapist.

Royal advisers are anxious to avoid the debacle that followed the controversy over the Countess of Wessex’s public relations company. An inquiry into the working lives of minor royals was set up, but the Palace rejected calls for it to be led by an outsider and it was conducted by Lord Luce, the Lord Chamberlain. His report was never published.

This time both palaces have accepted the need for a public response to try to defuse the controversy, preferably before the State Opening of Parliament tomorrow. They are also anxious to regain the initiative ahead of a party at the Ritz to be hosted by the Queen on Thursday, which was intended to mark her gratitude for the success of the Golden Jubilee celebrations in the summer. “That all seems such a long time ago,” one dejected courtier said last night.

The decision to review the homosexual rape case allegations will put a question mark over the future of Fiona Shackleton, the Prince of Wales’s legal adviser, who conducted the initial inquiry in 1996. That investigation was later described as “lamentable” by another firm of solicitors.

The police and the Director of Public Prosecutions both interviewed the alleged victim — George Smith, 42, a former valet who sold his story to a Sunday newspaper for a reported £30,000 — and concluded that there were no grounds for a prosecution.

The man accused of the rape was identified in an Italian newspaper, but he has not been named in Britain. He has anonymously denied the accusations in a statement issued through his solicitors, Kingsley Napley, describing Mr Smith as unreliable and an alcoholic whose story differed “substantially and significantly” from what he told police last year.

Mr Burrell, who is in America to try to generate more income for his revelations about his life as butler to Diana, Princess of Wales, admitted to being surprised at the backlash since he decided to sell his story to the Daily Mirror for £300,000.

His character has come under sustained criticism for allegedly betraying his wife and children with a string of homosexual trysts. He said: “I never realised it would be so vicious and personal.”

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