TWO more staff members last night parted company with Princess Diana following the resignation of her private secretary. The departure of Nicky Cockell (32), a secretary, and chauffeur Steve Davis leave just two relatively junior staff running the princess's office.

Princess Diana was at the eye of yet another storm yesterday, with her sons' nanny, Alexandra "Tiggy" Legge Bourke (30), threatening to sue over an alleged sexual insult at a palace staff Christmas party.

Last year several tabloids ran a photograph of Prince Charles kissing Tiggy on the cheek on an Alpine ski slope. Now Tiggy has hired libel lawyer Peter Carter Ruck to demand an apology.

Royal watchers are speculating that the remark involved some sort of sexual slur, stage whispered by Princess Diana in Tiggy's ear as she glided past her table. Richard Kay of the Daily Mail said it consisted of seven words, beginning with "So sorry..."

"Tiggy did not really reply, except to respond incredulously, `What ...?' " Kay reported. "She was helped into another room by Prince Charles' valet ... and then, behind a closed door, she burst into tears.'

The SUN said Diana's remark was "a sex jibe" and "a groundless slur . . . the final straw" that drove Patrick Jephson to quit abruptly as Diana's private secretary. The Dolly Mirror said Jephson was enraged by Diana's remark to Tiggy and stormed out, saying "I can't stand it any more."