The Queen's rooms were regularly checked for bugging devices, the inquest into the deaths of Princess Diana and Dodi Al Fayed has heard.
Lord Fellowes was at the Queen's side for 22 years
But Lord Fellowes, the Queen's private secretary in the 1990s and Diana's brother-in-law, insisted checks were only made to provide "reassurance".
And he denied he had been involved in a conspiracy to kill the princess.
Mohamed Al Fayed, father of Dodi Al Fayed, has claimed Lord Fellowes was involved in the alleged MI6 plot.
The peer told the inquest that he could not have been part of any attempt to murder her because at a crucial time he was listening to a talk by Rumpole of the Bailey creator, John Mortimer.
Diana, Dodi Al Fayed and driver Henri Paul died in a Paris car crash in 1997.
Lord Fellowes had explained how recordings of telephone calls made by Diana and the Prince of Wales - the so-called "Squidgy-gate" and "Camilla-gate" tapes - had led to meetings and correspondence between the heads of MI5 and GCHQ in 1993.
But he added that the then-home secretary had prevented a full security service investigation of the incidents because of concerns the press would misrepresent such a move.
Among the documents shown to the court were letters between officials at the time that explained these concerns.
One was a letter from Sir Clive Whitmore, permanent secretary at the Home Office, to the then-cabinet secretary Sir Robin Butler (now Lord Butler).
It read: "He (the home secretary) thinks that there is a real danger that even a Security Service inquiry of the kind we have in mind would quickly come to the attention of the media.
"His strong fear is that when that happened, the press would portray the existence of the inquiry as clear proof that... they believed in fact that such involvement was a real possibility and that they were therefore having it investigated."
Lord Fellowes also told the court that the recordings had caused concern at Buckingham Palace.
He said: "It would be wrong, I think, to say that the Queen 'demanded an inquiry' - it wasn't her habit to react in that way but to consult and to be informed by the best advice available.
"There were two strands of thinking, one was obviously if there had been anything nefarious done that it should be discovered and punished.
"But the main strand of thinking in Buckingham Palace, if I put it broadly, was that this had happened and what action should be taken to ensure that it did not happen again."
The peer - who was at the Queen's side for 22 years - was asked by Ian Burnett QC, counsel to the inquest, whether the threat of eavesdropping was a concern at the palace.
He replied: "I wouldn't say it was a constant preoccupation but yes, we needed reassurance at regular intervals that there was no bugging going on."
Lord Fellowes added that sweeps of the Queen's rooms had been carried out by the security services.
Mohamed Al Fayed - the owner of Harrods - has alleged Lord Fellowes helped to co-ordinate a murder plot by ordering a section of the British embassy in Paris to send messages to GCHQ shortly before the crash.
He has said Diana "feared" Lord Fellowes, who is married to her sister, Lady Jane Fellowes.
Mr Burnett told the peer: "It had been suggested, particularly in a letter from Mr Al Fayed, that it was said that you had been present in the British Embassy at 11 o'clock on the evening of 30 August 1997, commandeering the communications centre to send messages to GCHQ.
"In other words it was being suggested that you were intimately concerned in the murder of your sister-in-law."
Asked if he had been in Paris that night, Lord Fellowes answered: "No."
He added: "We were in Norfolk that evening, we had people to stay, we went to an entertainment by Mr John Mortimer in Burnham Market church."
The court has already heard that Diana had feared she had been under surveillance and had had her apartments at Kensington Palace swept for bugs by specialists.
Lord Fellowes also told the jury he had never seen any animosity being directed towards Diana by the Duke of Edinburgh "in writing" or "more generally".
The princess's friend Roberto Devorik has already told the court that she thought the peer was hostile towards her, to which the peer said: "I'm sad if she felt that."
Lord Fellowes said he was "very fond" of Diana in the 1990s and was "sad that she had not had a happier and more stable time in those troubled years".
The peer also cast doubt on the suggestion that Lord Condon, who at that time was Britain's most senior police officer, had warned the Queen to stop the princess accepting a holiday invitation from Mohamed Al Fayed to St Tropez.
He said the alleged communication of such a message would not be in line with the expected protocol about raising such an issue with the Queen.