Prince Harry naked: The Sun was right to publish 'cute' pictures, says Murdoch's daughter

In doing so, it defied a request not to publish the photos made by St James's Palace via the press watchdog.

However last night, as it emerged the pictures would be published, the Palace indicated it would not take any action against the newspaper.

A spokesman said: "We have made our views on Prince Harry's privacy known. Newspapers regulate themselves, so the publication of the photographs is ultimately a decision for editors to make." He said that there would be no further comment.

Prince Harry was photographed frolicking in the nude with an unnamed woman in Las Vegas.

The Sun’s publisher, News International, has been has been rocked by allegations that it journalists hacked the phones of scores of people including of members of the Royal Family. The scandal has raised serious questions about the ethics at the heart of the newspaper business, and its parent company, News Corp.

Do you believe the pictures of Prince Harry are in the public interest?

Ms Murdoch tried to distance herself from the scandal yesterday, with an impassioned speech about the need for companies to have “purpose” and a “moral language” rather than just chase profit.

However, she denied this morning that The Sun’s decision to publish the pictures of Prince Harry demonstrated a lack of regard for ethics.

“No, I don’t [think that]. I think there is a public interest argument. [Phone hacking] is very different to some girl with a camera phone sending pictures to TMZ. I don’t know what decision I would have made but I understand their decision,” she said.