Princess Diana
Princess Diana was murdered in a plot carried out by SAS commandos, says a former SAS sniper.

Senior figures in the British military have criticised the Army for its "mishandling" of allegations that an SAS hit squad was behind the death of Princess Diana and her lover, Dodi Fayed.

Scotland Yard is investigating claims by a former SAS sniper that Diana was murdered in a hit "arranged" by the SAS, according to a British tabloid.

The commando, known as Soldier N, is alleged to have told his wife that the Princess was killed when an SAS unit flashed a blinding light at the princess's vehicle, causing the driver, Henri Paul, to crash into a pillar as he entered a Paris underpass.

The allegations first surfaced in a seven-page letter written by Soldier N's mother-in-law in September 2011 after the disintegration of her daughter's marriage, the Daily Express reported.

The claims chime with the testimony of an ex-MI6 spy at the inquest into Diana and Dodi's death. The agent said he knew of a British plan to kill Serbian leader Slobodan Milosevic by using a strobe light in a tunnel to distract his driver.

The same agent also revealed the existence of a secret SAS unit known as "The Increment", which specialised in lethal MI6 operations.

The original accusations against the SAS were passed to Scotland Yard in July, following the complaint by Dodi's father, the former Harrods owner Mohammed al Fayed.

Detective Chief Inspector Philip Easton and a colleague at Scotland Yard interviewed Soldier N's former wife and mother-in-law two weeks ago.

The letter containing the original allegations was handed to police after the court martial of SAS sniper Danny Nightingale in July.

Soldier N was sentenced to two years imprisonment for possession of illegal firearms in 2011. Allegations that the SAS was involved in Diana's death emerged soon afterwards.

One senior military source said: "The handling of this very serious allegation could not have been worse. The question is, was this failure to act due to incompetence or a cover-up?"

Police said the information was being analysed as part of a "scoping exercise". No new investigation will be launched.

The Express has long campaigned for more scrutiny into the circumstances surrounding the Princess's death.

It said David Cameron, the prime minister, had been sent a copy of the letter, along with the head of the army, General Sir Peter Wall and Defence Secretary Philip Hammond, but that they had all failed to act.

Downing Street and the Ministry of Defence were informed of the allegations concerning the SAS in February in a letter from soldier N's wife, the Express reported.

On 1 March, a Downing Street official acknowledged receipt of the letter, writing: "I am writing on behalf of the Prime Minister to thank you for the copy of your letter and enclosure of 11 February addressed to the Chief of the General Staff.

"I was sorry to hear of the difficulties you are experiencing. Mr Cameron appreciates you taking the time and trouble to share your concerns."

General Wall replied to the letter on 4 March but, like Cameron, made no mention of the allegations concerning Diana.

His note concludes by adding that he was copying the letter to "the Director of Special Forces and the Commanding Officer of the Special Air Service Regiment".

Diana, Fayed and Paul were all killed in the crash in the Pont de L'Alma tunnel on 31 August 1997.