In an attempt to quash gossip, he publicly dismissed allegations that the Prince of Wales was involved in an incident in the royal household, witnessed by a former servant.
The Mail on Sunday has been prevented from publishing the claims by a High Court injunction.
But - as another newspaper won the right to publish the name of one of those allegedly involved - Prince Charles' own advisors stepped in to deny all aspects of the story.
We also heard from the Telegraph's Legal expert, Joshua Rozenberg.
Further details from BBC News Online
Details of the allegations cannot be published for legal reasons and Prince Charles issued a statement on Thursday night, saying "this allegation is untrue".
The denial, issued from Clarence House, came after the Guardian newspaper won a High Court battle to name former royal aide Michael Fawcett as the person trying to stop allegations from being printed by the Mail on Sunday.
The Mail on Sunday was blocked on Saturday night from publishing a story about the prince' s former aide, Mr Fawcett.
The Guardian told the court it had no intention of repeating the allegations, but had a right to name Mr Fawcett.
The statement from the Prince, who is in Oman on an official visit, said: "In recent days, there have been media reports concerning an allegation that a former Royal Household employee witnessed an incident some years ago involving a senior member of the Royal Family.
"The speculation needs to be brought to an end.
"The allegation was that The Prince of Wales was involved in the incident.
'Sadness'
"This allegation is untrue. The incident which the former employee claims to have witnessed did not take place."
The former employee referred to by Clarence House is not Mr Fawcett.
The statement said there was "particular sadness" about this allegation because it was made by a former Royal employee "who, unfortunately, has suffered from post-traumatic stress disorder and has previously suffered from alcoholism following active service in the Falklands".
The Mail on Sunday is expected to return to the High Court on Friday to challenge the original injunction won against it last Saturday.
The Prince's private secretary Sir Michael Peat said it was "rather unusual to make a statement about an unspecified allegation".
'Three reasons'
"However, this allegation is becoming common currency, it is the subject of much speculation and innuendo and I just want to make it entirely clear, even though I can't refer to the specifics of the allegation, that it is totally untrue and without a shred of substance."
Sir Michael said he knew the allegation was untrue for "three principle reasons".
"Firstly, the Prince of Wales has told me it is untrue and I believe him implicitly," he said.
"Secondly, anyone who knows the Prince of Wales at all would appreciate that the allegation is totally ludicrous and, indeed, risible."
The third reason was that the person who made the allegation had "suffered from health problems and has made other, unrelated allegations which have been investigated by the police and found to be unsubstantiated."
Sir Michael would not be drawn on whether the allegation should be revealed.
"Firstly it is not for me to judge what is and what isn't in the public
interest," Sir Michael said.
"However, I would say that anyone who is a prominent public figure like the
Prince of Wales is subject to a fairly steady stream of outlandish allegations.
"Generally they are dismissed and treated on their merits.
Return to court
"For some reason this one doesn't seen to have been."
The Mail on Sunday's editor, Peter Wright, said: "Our lawyers have given notice of our intention to apply to the court on Friday to challenge the terms of the injunction against us."
Mr Fawcett had argued that his name should not be revealed, as the publication of the story would seriously libel him.
But the Guardian's editor Alan Rusbridger said it would have set a dangerous precedent.
In March, Mr Fawcett was cleared of serious malpractice after a report alleged wrongdoing at St James's Palace - the prince's former residence - but he resigned as the prince's aide.