Insisting that the allegations against the Prince were categorically untrue, the Palace today issued a second statement after British Sunday newspapers printed further details of interviews the woman has given in recent years.
"It is emphatically denied that HRH The Duke of York had any form of sexual contact or relationship" with the woman, a spokesman for the Buckingham Palace said, naming the alleged victim, who had sought to preserve her anonymity.
The woman, referred to as "Jane Doe #3" in a court filing, has alleged in a court filing in Florida that she had been kept as a "sex slave" by financier Jeffrey Epstein.
She alleged that she was forced to sleep with the 54-year-old Prince when she was under age between 1999 and 2002 in London, New York and the Caribbean at Epstein's behest.
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While the age of consent is 16 in Britain, it is 18 in much of the United States.
The court document alleges that Epstein sexually trafficked the woman making her available for sex to "politically connected and financially powerful people".
The Prince has previously been criticised for his former friendship with Epstein, who was jailed for 18 months for soliciting a minor for prostitution in 2008.
On Friday, Buckingham Palace took the highly unusual step of "categorically" denying the allegations made by the woman.
The Palace's initial statement had said, "Any suggestion of impropriety with under-age minors is categorically untrue."
But the Palace officials now decided to go further and meet the scandal head on with a statement that not only addressed the issue of sex, but also named the complainant.
Besides accusing him of having slept with her, papers lodged by the woman's legal team go on to accuse the Prince of lobbying the US authorities to ensure Epstein was given a "more favourable plea" bargain following a series of sex abuse allegations against him.