Princess Diana was in line to take the Whitney Houston role in a sequel to 1992 romantic blockbuster The Bodyguard shortly before her death, Kevin Costner has revealed.

Speaking on the US talk show Anderson, in a recording due to be broadcast in May, Costner said he received the screenplay for the proposed project on 31 August 1997, the day before the princess was killed in a car accident in a Paris tunnel at the age of 36 while trying to escape chasing photographers. The film, tentatively titled The Bodyguard 2, would have seen Diana take a familiar role, that of a princess who requires protection from paparazzi and stalkers. Costner would have reprised his role as former special agent turned bodyguard Frank Farmer, who is charged with keeping her safe.

"Diana and I had been talking about doing Bodyguard 2," said Costner, who produced the first film. "I told her I would take care of her just the same way that I took care of Whitney.

"She wanted me to write it for her. I said: 'I'll tailor it for you if you're interested.' She goes: 'I am interested.'"

The Bodyguard was one of the highest-grossing films of the early 90s, with a worldwide return of $410m. More than 42m copies were sold of the soundtrack – a world record – thanks largely to Houston's rendition of the Dolly Parton number I Will Always Love You. In the first movie, the latter played a singer in a role written originally for Diana Ross. Her performance, and the film's success, briefly made her one of the highest paid actors in the world in the mid-90s, commanding $10m a movie. At the time of her death at the Beverly Hilton Hotel in Los Angeles on 11 February, hours before she was due to attend a pre-Grammy awards party, Houston had not appeared on the big screen since 1996's The Preacher's Wife. However she is due to make a posthumous return in the forthcoming musical remake Sparkle, scenes for which were filmed prior to her death.

Deadline revealed in February last year that a sequel to The Bodyguard was once again in play at studio Warner Brothers, though no cast details or director have yet been announced. It would have focused on the dangers presented to famous figures by the threat of cyberstalking.

Princess Diana was not previously known for her acting ambitions, but a version of her will soon be seen on the big screen. Naomi Watts is to play the princess in the biopic Caught in Flight from German film-maker Oliver Hirschbiegel, director of Downfall, a film about the last days of Hitler. It reportedly focuses on the last two years of her life.