Kolin Dhillon, who met Charles through Cirencester Polo Club near the royal's country house in western England, said the prince was a man of 'zero prejudice' after the nickname was reported by the press.

'I have to say that you know you have arrived when you acquire a nickname,' Mr Dhillon said in a statement.

'I enjoy being called Sooty by my friends who I am sure universally use the name as a term of affection with no offence meant or felt.

'The Prince of Wales is a man of zero prejudice and both his sons have always been most respectful.'

Princes William and Harry also reportedly use the name to address Mr Dhillon.

The story emerged two days after a tabloid newspaper obtained a video of Harry, Charles's youngest son with the late princess Diana, in which he referred to an army colleague of South Asian origin as a 'Paki'.

The father of Ahmed Raza Khan has accused Prince Harry of using a 'hate word' against his son.

Prince Harry, a 24-year-old serving officer in the British army, has apologised for the remark made in 2006, while the Ministry of Defence said the royal's commanding officer would look into the matter.

Prince Charles's use of the nickname - an apparent reference to Mr Dhillon's skin colour - seems to sit awkwardly with his interest in Britain's ethnic minorities and inter-faith dialogue.

His Clarence House office has declined to comment in detail, but said: 'To imply the princes are racist is ridiculous.

'Through their charity work all three of them are committed to helping people both in the UK and abroad regardless of who they are.'

Prince Charles was also defended by Sir Gulam Noon, a leading British-Asian businessmen known as the 'Curry King' after making a fortune from ready meals.

'Political correctness has gone a little bit too far,' he told the BBC.

'I have been working with Prince Charles for more than 20 years now and he has always been absolutely courteous and respectful to every Asian community member he has ever met.'

But republican groups used the controversy to criticise the royal family.

Graham Smith, campaign manager for the organisation Republic, said: 'I think it goes to show the royal family are not a symbol of unity, it's not something we can rally around, they're quite divisive.

'People are saying they are not racist but on the evidence in the public domain I think that's to the contrary.

'It also shows how hugely out of touch they are and that they live in a very isolated world, only mixing with a certain kind of person.' -- AFP