Bashir, who is the BBC’s Religious Affairs editor, is one of several current or former staff who were involved in the controversial broadcast.
The BBC is covering the legal fees of those who are going to be called to give evidence at an independent investigation into how the the interview was secured.
Martin Bashir, pictured right, will give evidence at an independent investigation into how he secured the 1995 interview with Princess Diana, left
The 1995 interview caused major controversy with Diana claiming there were ‘three people’ in her marriage to Prince Charles
According to The Telegraph, Bashir, 58, faces being sacked if the inquiry is critical of his methods convincing Diana to speak on camera about her marriage to Prince Charles.
It said the legal fees could mount up to several hundreds of thousands of pounds.
The investigation is being led by former Master of the Rolls, Lord Dyson.
The former director-general of the BBC, Lord Hall, is also being investigated by the inquiry.
The Telegraph claimed Bashir is being represented by Lewis Silkin, which specialises in employment law.
The Metropolitan Police confirmed it was not launching a criminal invesitigation into the interview.
The Metropolitan Police said ‘no further action’ will be taken over allegations connected to the Panorama programme broadcast in 1995.
A former employee of Earl Spencer, who claims he was the subject of false documents allegedly used to gain access to Diana, had earlier made a formal complaint to the force.
A legal representative of Alan Waller, who used to work for Diana’s brother Earl Spencer as head of security, wrote to the Met alleging unlawful activity.
Commander Alex Murray said earlier this month: ‘In recent months the Metropolitan Police Service received correspondence alleging unlawful activity in connection with a documentary broadcast in 1995. This was carefully assessed by specialist detectives.
‘They obtained legal advice from Metropolitan Police lawyers, independent counsel and from the Crown Prosecution Service.
‘Following this detailed assessment and in view of the advice we received, we have determined that it is not appropriate to begin a criminal investigation into these allegations. No further action will be taken.
‘In this matter, as in any other, should any significant new evidence come to light we will assess it.’
It has been alleged that Bashir used two mocked-up bank statements to falsely show Mr Waller was receiving payments as a way to persuade the earl to give him access to Diana.
Bashir, pictured, is alleged to have used mocked-up bank statements to help secure the dramatic interview
The BBC has previously said in a statement that during an internal corporation investigation in 1996, Mr Bashir admitted commissioning mocked-up bank documents.
They had been shown to Earl Spencer, but he said they had played no part in securing the princess’s appearance on Panorama.
Earl Spencer has alleged Bashir showed him fake financial documents relating to Diana’s former private secretary Patrick Jephson, and another former royal household member, and told outlandish and untrue stories about the royal family to gain access to his sister.
His claims have led the BBC to appoint Lord Dyson, former Master of the Rolls and head of civil justice, to lead a new independent investigation, which has already begun, to discover what steps the BBC and Bashir took to land the interview with Diana.
The now infamous Panorama interview was clearly the deciding factor in influencing the Queen to urge her son and his estranged wife to divorce.
The princess called royal officials ‘the enemy’ and questioned the Prince of Wales’s suitability to be King.
The 55-minute broadcast in 1995 was seen as an attack on both Charles and the royal family, with Diana arranging the interview in secret without even telling senior members of her Kensington Palace household.
‘I would think that the top job (being king), as I call it, would bring enormous limitations to him, and I don’t know whether he could adapt to that,’ the princess told Martin Bashir.
Diana, who appeared sad-eyed and spoke with her head dipped, opened up about her struggles with royal life, how she felt isolated and unsupported and how her husband’s staff wanted to undermine her.
‘The enemy was my husband’s department, because I always got more publicity, my work was more, was discussed much more than him,’ she said.
She confessed to adultery with cavalry officer James Hewitt, and said of Charles’ affair with Camilla Parker Bowles, now the Duchess of Cornwall: ‘There were three of us in this marriage, so it was a bit crowded.’
Diana also talked frankly about her post-natal depression, self-harm and bulimia, and her desire to become a ‘Queen of people’s hearts’.
A quarter of a century later, an independent investigation is examining the lengths Bashir went to to secure Diana’s co-operation.
According to the Telegraph, it is understood Bashir is being represented by James Davies of Lewis Silkin.
He told the paper: ‘It is common practice for an employer to contribute to an employee’s legal costs in circumstances such as this. Surely, you would not expect BBC employees to be given less assistance than those working in other organisations merely on account of its source of funding.’
The BBC claimed it was ‘determined to get to the truth of what happened. That’s why we have appointed Lord Dyson to lead a fully independent investigation. In line with standard practice, we provide a capped contribution for legal support where former or current staff are required to participate.’