Princess Diana tributes left outside Kensington Palace.
The former snipers estranged wife has informed Scotland Yard she is completely sure he is telling the truth.
Her total belief in Soldier N emerged as she was interviewed at length at a secret location.
She told Yard detectives how the veteran soldier had spoken about the involvement of an SAS hit squad in the car crash that killed Diana and her boyfriend Dodi Fayed on several occasions.
Significantly, she said that the sergeants allegations came while they were on good terms and before their marriage had hit the rocks.
One source said: This was not said to scare or threaten her. It came out when there was no marital strife and when they were still friends.
She was utterly convinced he was telling the truth when he said the SAS was involved in Diana and Dodi Fayeds deaths.
Soldier N apparently claimed Diana and Dodis driver Henri Paul were blinded by an intense flash of light moments before he lost control of their Mercedes. The claim appears to support testimony from an ex-spy at the inquest into Diana and Dodis death.
The former MI6 agent told the hearing that he was aware of a colleagues proposal to kill Serbian leader Slobodan Milosevic by using a strobe light in a tunnel to distract his driver, causing a crash.
And he revealed the existence of a shadowy unit within the SAS known as The Increment which comprises troops from the SAS and SBS for the purposes of carrying out lethal operations on behalf of MI6.
Diana, Dodi and driver Paul died when their car smashed into a pillar in the Pont de LAlma underpass in Paris in August 1997. A bodyguard, Trevor Rees-Jones, was critically injured but survived.
Scotland Yard officers are now understood to be preparing to interview Soldier N.
Allegations that the SAS was involved in the deaths were passed to the Yard in July.
They were contained in a seven-page letter written by Soldier Ns mother-in-law in September 2011 when her daughters 13-year marriage had disintegrated amid claims of his bizarre and threatening behaviour.
Last week, Detective Chief Inspector Philip Easton and a Yard colleague travelled to a secret location to interview both women.
Mr Easton, who worked on the Yards original inquiry into Dianas death, is believed to have quizzed Soldier Ns estranged wife very closely.
She is said to have given a compelling account of what her husband had told her. She does not think the claims are too fantastic: Not when youre living with someone who is in the SAS.
The letter was handed to the Yard following the court martial of fellow SAS sniper Danny Nightingale in July.
Soldier N and Sgt Nightingale were arrested in 2011 after police raided the house they shared in Hereford where the crack regiment is based.
Officers found firearms and ammunition illegally held by both men.
Soldier N admitted the offences and last year was sentenced to two years at the Military Corrective Training Centre in Colchester, Essex.
His former friend, Nightingale, also admitted the charges and got 18 months when he first appeared at a military court last year. Following a public campaign, he was released and the conviction quashed.
However, Sgt Nightingale faced a fresh trial at the military court in Bulford, Wiltshire, in July, when he was found guilty and sentenced to two years suspended for 12 months.
The Paris car crash of August 1997 that took the lives of Princess Diana and Dodi Fayed.
He was convicted largely on the sworn testimony of Soldier N who was a key prosecution witness.
Allegations that the SAS was involved in Diana and Dodis deaths emerged soon afterwards.
Police insisted the sensational information was being analysed as part of a scoping exercise and no new investigation has been launched.
Yesterday, a Yard spokeswoman said: The information is still being assessed.
Dodis father, former Harrods owner Mohamed Al Fayed, has not commented publicly on the claims.
But it is understood the family would like to see a full-scale investigation into the allegations.
Mr Al Fayed has always maintained that Diana, 36, and Dodi, 42, along with 41-year-old Paul, were killed by the British Establishment which then launched a massive cover-up.
Soldier N has now been discharged from the Army.
The letter by his mother-in-law listed a series of bizarre and often sinister allegations about his behaviour. On one occasion, he is said to have threatened to make his wife disappear and allegedly bragged to his in-laws that he had killed women and children.
After the Diana allegations first surfaced, he was branded a loose cannon who could not be believed even though he was a witness of truth for the Crown in the Nightingale case.
But Army friends have rallied round Soldier N.
The decorated special forces veteran has been welcomed into the SAS Association the exclusive club for former members of the elite unit despite his conviction and discharge.