Sir Richard Dearlove, who directed the agency's special operations at the time the princess died in Paris in 1997, also scoffed at claims by Mr Al Fayed that MI6 had acted against the couple on orders from Prince Philip, the queen's husband.

'It is utterly ridiculous,' Mr Dearlove said.

MI6, the Secret Intelligence Service, had not mounted any operation directed at Princess Diana and her boyfriend, Dodi Fayed - including surveillance or bugging, said Mr Dearlove.

Not possible
He would know, he said, because as director of special operations from 1994 to 1999 he had to approve every such operation, which required the further approval of the foreign secretary.

In addition, all such approvals were subject to an annual independent review by a senior judge.

An operation mounted by rogue agents was 'impossible,' Mr Dearlove said, and so was an independent action by agents in Paris.

'Out of the question. It is just not conceivable,' he said, referring to his previous testimony about the management structure of the agency.

'There is nothing, not a bit that acts independently or goes off and does its own thing. This does not exist,' he said.

His appearance before the inquest was an extraordinary exception to agency policy of neither publicly confirming nor denying any allegations about its activities.

Just 20 years ago, the government refused to acknowledge the existence of the MI6 spy agency or MI5, its domestic counterpart.

Mr Dearlove, who fidgeted with a pen for much of his testimony, answered most questions calmly but showed occasional signs of irritation.

He denied that MI6 had a file on Mr Al Fayed - whose son died in the crash - or on driver Henri Paul, or the Ritz hotel in Paris.

National security threat
Mr Dearlove rebuffed a suggestion by Mr Al Fayed's lawyer, Michael Mansfield, that someone might have regarded an alliance between Princess Diana and the Fayed family as a threat to national security.

He said the agency took no interest in their romance.

'I am sorry to disappoint you,' he said to Mr Mansfield, 'but no interest whatsoever.'

Mr Al Fayed disputes the conclusion by French and British police that the crash on Aug 31, 1997 in a Paris road tunnel was an accident.

Testifying on Monday, Mr Al Fayed asserted his belief that the couple were victims of a complex conspiracy including Philip, Prince Charles, Princess Diana's sister, the US Central Intelligence agency and former Prime Minister Tony Blair, among others.

Assasination of president
Mr Dearlove, who headed the spy agency from 1999 to 2004, also denied a claim by former agent Richard Tomlinson about an alleged plan in the early 1990s to assassinate the late Slobodan Milosevic, then president of Serbia.

He confirmed that one agent suggested the possible assassination of another Balkan leader, and that the idea was quickly 'killed stone dead' at a low level.

Mr Dearlove appeared exasperated by Mr Mansfield's persistent questions about Mr Tomlinson's allegations, commenting at one point that 'it seems to me we are a huge distance away from the subject of this inquest.'

Coroner Lord Justice Scott Baker responded that he had deliberately allowed the lawyers much latitude.

'These inquests have been very wide-ranging and many aspects of the evidence, many would say, have only marginal, if any, relevance to the issues that have to be decided,' Mr Baker said.

'But the one matter that I have had very much in mind throughout is that one of the purposes of the inquests, perhaps particularly pertinent to this one, is to confirm or allay public suspicion.'

Mr Dearlove acknowledged that the 'no assassination' policy was not put down in writing in training manuals during his time, but would have been communicated orally.

Mr Mansfield suggested that the incident raised questions about the effectiveness of MI6 management and whether all agents embraced the 'no assassination' rule.

Mr Mansfield said he was asking the jury 'to consider ... the possibility that elements within the security services in 1997 were responsible, not just for drawing up a plan, but the possibility that one or more of them may have been responsible for what happened.' -- AP