Three men have been arrested for allegedly intercepting phone calls after staff at Clarence House reported alleged security breaches within its telephone network, police said last night.
The three - aged 35, 48 and 50 - were held early yesterday and they are thought to include News of the World's royal editor Clive Goodman.
Scotland Yard's Royalty Protection Unit was alerted by three members of the Royal Household at Clarence House - the official residence of the Prince of Wales - in December last year.
The investigation was passed to the force's Anti-Terrorism Branch which begun an investigation resulting yesterday's arrests. The members of the Royal Household who alerted police are not members of the Royal Family.
The investigation is being handled by Scotland Yard's Anti-Terrorist Branch because of the wider security implications of the allegations.
The 48-year-old man was arrested at his home address in Putney, south London, while the 35-year-old was held at his home in Sutton, also south London, both at 6am today.
All three men were arrested under Section 1 of the Regulation of Investigatory Powers Act 2000 and were taken to central London police stations where they remain in custody.
Officers have searched the residential address in Putney and the Sutton address of the 35-year-old man.
They have also completed searches at business addresses at the offices of News International in Wap-ping, as well as Sutton and Chelsea.
It is understood that the allegations relate to the interception of mobile phones, rather than landlines.
The investigation has now extended beyond Clarence House and detectives believe that public figures beyond the Royal Household - thought to include an MP - have also been targeted.
The investigation is still trying to establish how many people have been affected. Officers have not ruled out the possibility that other Royal Households could have had their phones intercepted, or that the conversations could have involved members of the Royal Family. Sources said the allegations did not relate to the tapping of live telephone calls, but another method of telephone interception or alleged hacking.
Scotland Yard said in a statement: "Police launched an investigation after concerns were reported to the Met's Royalty Protection Department by members of the Royal Household at Clarence House.
"It is focused on alleged repeated security breaches within telephone networks over a significant period of time and the potential impact this may have on protective security around a number of individuals."