Agents Said to Tape Charles, Diana : Britain: A tabloid prints an apparent quarrel. Royal residences are reported bugged by security services.

Britain’s Royal Family was engulfed in renewed controversy Wednesday when a newspaper charged that the nation’s security services had bugged and taped the Prince and Princess of Wales’ private conversations in their own home.

The Sun, a tabloid newspaper, said the government’s top-secret agencies taped a quarrel between Prince Charles and Princess Diana at their country home. Several reporters who regularly cover the Royal Family said that royal residences, “from the queen’s on down,” have been regularly bugged by the security services to protect the monarchy and alert the government to any actions by Royal Family members that might have national security implications.

Home Secretary Kenneth Clarke denied that the security services had anything to do with the bugging.

“There is not a shred of evidence to show it is MI-5 (counter-espionage). If it were to be true, I would be absolutely astonished,” he said.

In its exclusive story, picked up by all other hotly competitive British tabloids, the Sun published a full page of what it described as a heated conversation between Charles and Diana in their country house at Highgrove in Gloucestershire. In it, the couple allegedly argued--last November before their separation was officially announced--about custody of their sons, Princes William and Henry.

At one point, Charles is quoted as declaring: “This is so silly, talking like crazy people, talking about custody. It won’t come to that.”

At another point, Diana is said to ask, “For once could you put yourself out and think of me?”

Charles exclaims: “Don’t you dare to sit there and tell me to think of you. How the hell do you have the nerve to say that? I’ve done nothing but think of you and the children ever since this thing started. . . .”

Diana interrupts: “No, no, I don’t believe that at all. For once, stop being so self-centered. You still think of me as the person you married.”

Charles: “I stopped thinking like that years ago.”

Diana: “Yes, I suppose that would be a good indication of why we drifted apart, my dear.”

The reported conversation, though rancorous, was nothing like the sensitive, intensely personal and compromising reported conversations between Diana and a longtime male friend and between Charles and the wife of a military officer that were published earlier this year--and never disowned.

But those conversations were thought to have been intercepted by monitoring phone calls between a fixed telephone and a mobile phone. The conversation reported Wednesday was said to have taken place inside a private royal residence and thus could only have been recorded by a bug.

James Whitaker, who reports on the Royal Family for the Sun’s rival, the Daily Mirror, said that digits on the transcript indicated that it did come from official intelligence sources.

As in the United States, British intelligence is fragmented and sometimes competitive: MI-5 handles domestic security, as the FBI does; MI-6 is in charge of foreign operations, like the CIA; the General Communications Headquarters is the British equivalent to the National Security Agency. And the military services and various police forces throughout the country have their own intelligence units.

“Any of those might just possibly be involved,” said one expert.