Prince William was paid a "very large sum" by the owners of the Sun newspaper to settle historical phone-hacking claims, court papers say.
The payment in 2020 was revealed in papers from Prince Harry's lawyers as part of his legal action against News Group Newspapers at the High Court.
The Duke of Sussex is suing the publisher over alleged unlawful information gathering.
But NGN says he has run out of time to bring a claim.
The documents do not disclose the amount Prince William settled for and do not have the details of what it related to. A spokesman for the Prince of Wales said they would not comment on ongoing legal proceedings.
According to Prince Harry's witness statement, the newspaper owners struck a "secret agreement" with officials at Buckingham Palace to put off legal claims from members of the Royal Family.
That alleged agreement, the details of which has not been disclosed in court, had delayed Prince Harry from bringing his own case, his lawyers say.
The prince says that he first became aware of the alleged deal in around 2012.
At that time, he learnt that royal staff were starting legal action for phone hacking - and he believed he and his brother had been personally targeted too.
When the brothers consulted officials or the Royal Family's top solicitor, he says they were told that they could not begin their own legal action.
"The rationale behind this was that a secret agreement had been reached between the institution and senior executives at News Group Newspapers, whereby members of the Royal Family would bring phone hacking claims only at the conclusion of [all other cases] and at that stage the claims would be admitted or settled with an apology," the statement said.
"The reason for this was to avoid the situation where a member of the Royal Family would have to sit in the witness box and recount the specific details of the private and highly-sensitive voicemails that had been intercepted."
Prince Harry said courtiers were "incredibly nervous" about a repeat of the damaging disclosure of an intimate phone call between his father and Camilla, the Queen Consort, which had been intercepted and published at a time when King Charles was still married to Diana.
"This agreement, including the promises from NGN for delayed resolution was, obviously, a major factor as to why no claim was brought by me at that time," said Prince Harry.
His barrister, David Sherborne, said the Queen and two of her private secretaries were involved in "discussions and authorisation" over the alleged agreement, as well as private secretaries for William and Harry.
NGN denies any deal existed.
Anthony Hudson KC, for NGN, said the duke's allegation that there was a secret agreement was "flatly inconsistent" with other parts of his case and there was "extreme vagueness" surrounding the circumstances of the alleged deal.
He said Prince Harry did not say who made the agreement, who it applied to, when it was made, or a date when it was meant to expire.
This case is one of three major cases that the Duke of Sussex has made against tabloid newspapers, all alleging unlawful information gathering. The other cases concern the Daily Mirror and Daily Mail groups.
He alleges that evidence disclosed since the criminal trials - which related to phone hacking at the now-closed News of the World - prove he was serially targeted by its sister title, the Sun.
Prince Harry accuses its journalists and private investigators working for them of obtaining private and confidential information from when he was 11 or 12-years-old - including details on his personal life and movements.
The Sun's owners say that the Duke of Sussex's claim for damages should be scrapped because he has run out of time - and are applying to end Prince Harry's case.
If they succeed in their application it could block a similar high-profile damages claim from the actor Hugh Grant.
Lawyers for Mr Grant are also opposing the newspaper's bid to end the case over this week's three-day hearing.
At the conclusion of the hearing the judge will determine whether their claims will progress to a trial, due to be heard in January next year.
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