The incident happened shortly after jury selection for the hush-money trial was completed
Buckingham Palace apologised on Wednesday and a member of the royal household has quit after a black British charity campaigner was repeatedly asked where she "really" came from.
Ngozi Fulani, the chief executive of the London-based Sistah Space group, recounted the exchange with the unidentified woman on Twitter.
Fulani is a prominent advocate for survivors of domestic abuse, and was attending a reception at the palace with other campaigners on Tuesday.
After saying she was born and raised in the UK, and was British, Fulani said she was then asked by a "Lady SH": "Where do you really come from, where do your people come from?"
She was forced to say she was "of African heritage, Caribbean descent" but repeated again that she was a British national.
Fulani said the exchange left her with "mixed feelings" about the reception, which was hosted by Queen Consort Camilla to highlight violence against women and girls.
Buckingham Palace said it took the incident "extremely seriously" and called the comments "unacceptable and deeply regrettable".
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"We have reached out to Ngozi Fulani on this matter, and are inviting her to discuss all elements of her experience in person if she wishes," a statement read.
"In the meantime, the individual concerned would like to express her profound apologies for the hurt caused and has stepped aside from her honorary role with immediate effect.
"All members of the Household are being reminded of the diversity and inclusivity policies which they are required to uphold at all times."
Last year, the royal family revealed for the first time how many ethnic minority staff it employs and admitted it had not made sufficient progress on diversity.
The focus on improving diversity followed claims from King Charles III's youngest son Prince Harry and his mixed-race daughter-in-law Meghan about racism in the royal family.
They alleged in a 2021 television interview that an unnamed family member asked what colour skin the couple's son, Archie, would have.
The incident happened shortly after jury selection for the hush-money trial was completed
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