Prince Charles gave the Ford Escort to his fiancee in May 1981, two months before their wedding, according to the auction house Reeman Dansie in the English town of Colchester.
The car, which bears the premium Escort badge Ghia, had disappeared from the public eye for 20 years and is now expected to sell for between £30,000 and £40,000 (up to RM236,000) at the auction on June 29.
Needless to say, prospective buyers will be bidding for Lady Di's car, not just any old Escort Ghia, which can be bought elsewhere for as little as £1,000 (RM5,838) and with much less mileage.
The mother of Princes William and Harry, who died in a car crash in 1997, often drove the Escort to the polo matches of the heir to the British throne.
She used the silver-coloured 1.6l Ghia car until the birth of William in August 1982.
With a frog emblem on the bonnet, the car still has its original number plate WEV 297W, as well as the original colour and seats.
The car initially belonged to an antique dealer, but was bought by its current owner around the year 2000. The Royals fan had rarely driven the car and only shared the secret of its origin with the family.
More than 20 years after her death, Princess Diana remains an extremely popular figure in Britain. Only last year, another former car of hers, an Audi Cabriolet, was sold for £58,000 (RM339,000).
Just days after the new auction, on her 60th birthday on July 1, sons William and Harry are to dedicate a statue of Lady Di here. Both princes have given their daughters the name Diana as a first name.
