AN allegation of male rape in the Prince of Wales' household made by a Newport man should not have dismissed so easily, a report said today.

Former royal servant George Smith, of Malpas, claimed in 1996 that he had been the victim of rape by one of the Prince's closest aides, referred to in the report as "AA".

But Mr Smith, 42, who was said to have a history of depression and an alleged drink problem, was not believed, a report into the Prince's household by Sir Michael Peat says. Only Diana, Princess of Wales, took the former Welsh Guardsman's claim seriously enough to pursue the allegation.

However, the report, published today, said: "No-one believed Mr Smith's rape allegation."

Mr Smith, who now works at Newport's Royal Gwent Hospital, was 29 and a married father-of-two at the time of the alleged attack. His father Peter, 72, lives in Graigwood Close.

The Prince of Wales gave no credence to Mr Smith's allegation, the report said, and household staff with whom the Prince's lawyer, Mrs Fiona Shackleton, discussed the allegation shared his disbelief.

The report added: "Hounslow police did not give the allegation credence and did not investigate it.

"The allegation was not investigated by the household because it was disbelieved, because Mr Smith declined to pursue his complaint and because investigation, to the extent that it was considered, was pointless.

"It had been decided that Mr Smith had to go; and those were the instructions received from the Prince of Wales.

"A, if not the, major concern from an early stage was to avoid publicity being given to what was believed to be a baseless allegation.

"The objectives were...to remove Mr Smith, without giving him cause to repeat the allegation; and to provide generously for his, Mr Smith's, future."

A sum of £38,000 was made available to Mr Smith to cover the cost of treatment at the Priory clinic, his debts and future well-being, the report said.

But the report added: "A serious allegation of this sort should not, in our opinion, have been treated so dismissively, even though there was universal disbelief as to its veracity, without (at minimum) full and documented consideration of the decision not to investigate."

A senior royal aide at the centre of an inquiry into allegations of misconduct in the Prince of Wales' household dealt with elsewhere in the report resigned today.

But Michael Fawcett, who bent palace rules and accepted valuable perks and hospitality, will work for the Prince on a freelance basis.

And the report said that the Prince hoped to avoid ending up in the witness box with his sons William and Harry during the trial of former royal butler Paul Burrell. But the Prince was told he could not intervene in the case.