The prince's office last night said the letter sent to donors demanding cash to attend one of the prince's charity functions had been 'erroneously' sent out by a 'third party' without their knowledge and steps were immediately taken to ensure that it never happens again.
Clarence House said: "We do not permit the exchange of funds for an invitation to any events attended by the Prince of Wales or the Duchess of Cornwall. The letter was removed from circulation as soon as it was discovered."
Sources also insisted that the dinners were not 'fundraising events', and stressed that no public or charitable money was used to pay Premier Mode, whose bills are met by the prince 'privately'.
Buckingham Palace said there was a "well-established tradition of members of the Royal Family hosting events on behalf of charities and other organisations with which they have an association".
They added: "These are not fundraising events, but rather an opportunity to highlight the work of an organisation and thank its supporters - as was the case at these events hosted by the Prince of Wales."
Officials said events hosted by the royals on behalf of their charities are booked by their private offices and approval is sought through the Master of the Household for every event. Direct fundraising is not permitted and no costs are met by taxpayers through the Sovereign Grant.
Charles personally helps raise more than £100million a year for his many worthy charities and undertakes dozens of engagements. But the revelations have thrown an uncomfortable spotlight on the access donors are given to royal residences.
Sir Alistair Graham, ex-chairman of the Committee on Standards in Public Life, said: "It's giving special rights to the wealthy even though it's for charity."
Labour MP Paul Flynn said: "It demeans the status of the Royal Family to feel they will be trying to influence people in this way."
Three fundraising dinners were organised by Mr Fawcett in 2010, 2011 and 2015 at Buckingham Palace and Windsor Castle.
The most recent saw more than 250 benefactors welcomed to the Palace for a gala dinner hosted by Charles.
It was organised, according to a letter sent by a third party to supporters, to raise funds for Dumfries House and a second charity called Yerevan My Love, set up by Armen Sarkissian, former prime minister of Armenia and a close friend of the prince, to restore historic buildings there and help disadvantaged children.
They were asked to pledge amounts starting at £2,500 for a supporter, moving up to £25,000 for a sponsor, £50,000 for a patron and £100,000 as a benefactor. The evening was an opportunity, they were told, to thank them in person and "acknowledge their contribution".
Guests were instructed to transfer their cash to the Prince of Wales's Charitable Foundation's account at the Queen's bank, Coutts, and given details of the account number and sort code.
Upon receiving their pledge, the recipients were told, a formal letter of confirmation from the prince's private office would be sent out. "The Prince... would be very grateful for your support," it concluded.
The first event, held at Windsor in 2010 also in aid of Dumfries House and Yerevan My Love, was attended by Charles and his wife. According to reports in Armenia, key political and religious figures flew over and rubbed shoulders with executives from British companies.
Dumfries House, a stunning 18th century palladian mansion in Scotland, was saved by Charles for the nation in 2007, partly funded by a £20million loan taken out by his charitable foundation.
Since then £76million - the vast majority from private donors - has been spent turning it into a centre for the prince's charitable empire as well as a successful hub for local enterprise and employment.
Charles made Mr Fawcett executive director of Dumfries House in 2011. The appointment raised eyebrows among some in the royal household given that he has no formal experience of running a charity.
A spokesman for Dumfries House refused to say how much he is paid, but accounts list its most senior employee as earning £70,000-£90,000.
Sources denied a conflict of interest between Mr Fawcett's position in charge of the charity and his company's role organising the events in 2010, 2011 and 2015.
A royal spokesman said: "Clarence House pays Premier Mode a retainer to organise some of the events at Buckingham Palace and Windsor Castle. This assures the quality and consistency of the experience for all involved, including the charities. Premier Mode's fee to co-ordinate this work is not borne by the public purse or the charities."
Officials said it was up to Clarence House to decide which events to use Premier Mode for, and not Mr Fawcett. Clarence House declined to comment on how much Premier Mode was paid by Charles because it was 'commercially sensitive'.
