Intimate letters handwritten by Diana, Princess of Wales could be auctioned off and sold by her former lover, James Hewitt, his lawyer revealed yesterday.

"The letters belong to James Hewitt, he is free to sell them either to a private collector or by auction if he wants to," Michael Coleman said.

He made his comments as the News of the World revealed it set up a sting where Mr Hewitt agreed to sell the 64 letters for up to £10m to an undercover reporter posing as a Swiss tycoon.

"I can confirm we were approached, an unsolicited approach, by someone posing to be a private collector," said Mr Coleman.

"The story is accurate in the newspaper, it is just the emphasis that is wrong," he added.

"After first having an undertaking that if the letters were purchased they would not be made public, we opened negotiations with the supposed private individual."

"If there is an undertaking that they will not be made public, then he is willing to sell to a private collector or something like a museum, provided firstly, that there is an undertaking that the letters will not be seen."

"The letters were intended to stay private and they will stay private.

"The only people who have caused them to be made public is the News of the World," the lawyer added.

Relatives of Diana and the Royal family remained silent about the claims yesterday.

Buckingham Palace and St James's Palace both refused to comment.

A spokesman for Earl Spencer, Diana's brother, said: "It is not something we would comment on."

Former Army officer Hewitt, 44, has previously said he would "never dream" of selling the letters.

Some of the contents were alleged to be of a highly sexual nature. Some were sent while Hewitt was a major serving in Kuwait.

The News of the World said the letters "detail every facet of their sex lives".

The paper claimed Hewitt had already rejected a £4m offer from an American collector for just ten of the most salacious letters.

But at a meeting at Claridge's hotel in London, Hewitt allegedly told the undercover reporter: "I'd have thought if one letter is worth £500,000, ten letters would be worth £5m."

He added: "£10m for the whole lot. These letters are unique. It's the first time a member of the Royal family is writing to a serving soldier at war."

The newspaper claimed that his lawyer said the letters were in a Swiss vault and arranged a meeting in Zurich for a viewing.

The princess signed the letters with the name of one of her maids, E Daglia, to protect her identity.

The letters came to light when they were stolen from Hewitt's Devon home and were offered for sale to a newspaper in 1998.

Royal historian Hugo Vickers speaking on Sky News, said of Hewitt's revelation, "What do you expect from a pig except a grunt?