Cleo Rocos, who went with the princess, said Diana looked like a male model, The Sun reported. Disguised Diana was delighted when she was served in the bar without being recognised. She was wearing a camouflage army jacket, black leather cap and aviator sunglasses.
The princess had a wine and a beer. "When we walked in, we felt she would be discovered at any minute. But people just seemed to blank her. She sort of disappeared. She loved it," TV star Rocos said.
Diana was a fan of gay funnyman Kenny Everett. Keen to escape her stuffy royal life, she earlier met him and Rocos for lunch in London's Kensington. They had peach and champagne cocktails and went to Kenny's penthouse.
Everett called over Queen singer and neighbour Freddie Mercury and the four spent the afternoon downing more champagne in front of TV reruns of a US comedy.
They improvised the characters' voices, "but with a much naughtier storyline". Diana asked about their plans for the evening and Kenny said the Royal Vauxhall Tavern in South London was not for her.
"It's full of hairy gay men. Sometimes there are fights outside'. "We pleaded, 'What would be the headline if you were caught in a gay bar brawl?' But Diana was in full mischief mode. Freddie said, 'Go on, let the girl have some fun'," Rocos said.
"She did look like a beautiful young man. She was always a very fit girl, so they might have thought, 'There's a nice young man with pert buttocks'," Rocos says in her new book "The Power of Positive Drinking".
They got to the bar and left 20 minutes later. Next day, Diana sent a note saying: "We must do it again!" The night-out reportedly took place in 1988, when her marriage to Prince Charles was already on the rocks. Diana died aged 36 in a car crash in Paris in 1997.