The Duchess of York, Sarah Ferguson, says she is devastated and regretful after being secretly filmed offering to sell access to her former husband, Prince Andrew.
In a video, filmed by the News of the World newspaper, Sarah Ferguson asks a reporter posing as a businessman for Stg 1 million to introduce him to Prince Andrew, who is a special British trade representative.
The 50-year-old is later seen to accept a down payment of $US40,000.
The News of the World says its reporter met the duchess twice - in New York earlier in May and in London last week.
Sarah Ferguson married Prince Andrew in 1986 and the couple had two daughters, Beatrice in 1988 and Eugenie in 1990.
Although they separated in 1992 and divorced in 1996, the BBC reports she and their daughters later moved back into a wing of the former marital home and maintain a close relationship with the Duke.
The newspaper says the scandal will jeopardise Prince Andrew's position as a special British trade representative.
Buckingham Palace has declined to comment. The Palace says Sarah Ferguson is no longer a member of the royal family.