Naomi Watts has revealed she felt Princess Diana gave her permission to play her from beyond the grave.

Interviewed in the Mail on Sunday, the double Oscar-nominated star of Oliver Hirschbiegel's upcoming Diana biopic said she immersed herself so fully in the role of the late princess that she came to feel a spiritual connection with her subject.

"There were definitely moments when I felt Diana's presence – I dreamed about her a lot, too, and that's a first," said Watts. "I kept wondering to myself: 'Would she have liked it?'

"So I found myself constantly asking for her permission to carry on. I had saturated myself with Diana and her life and I felt this enormous responsibility of playing this iconic woman. It felt like I was spending a lot of time with her. There was one particular moment when I felt her permission was granted. That won't sound right in print, I know."

Hirschbiegel's film, titled Diana, focuses on the last two years of the princess's life, and especially her romance with the heart surgeon Dr Hasnat Khan (played by Lost's Naveen Andrews) shortly before her death. There is also a place in the tale for Dodi Fayed, with whom she was travelling when she died in a Paris car crash in August 1997. The latter is played by Canadian actor Cas Anvar. The German director is best known for acclaimed 2004 film Downfall, about the last days of Adolf Hitler.

Watts, who was Oscar-nominated for last year's The Impossible and 2003's 21 Grams, said she was initially unsure about taking on such an iconic figure. "There was a lot of hesitation on my part before I agreed to do it," she said. "Obviously I was taking on one of the most famous women of my time and an awful lot of pressure comes with that.

"You want to get it right, and everybody is going to have an opinion on the film and how she should be portrayed. It's very daunting. But then I also knew that the exciting roles, the best roles, come with a risk. In the end I decided that I couldn't not do it."

Watts, who was born in Britain and moved to Australia at the age of 14, said she painstakingly researched the role by watching old interviews and reading biographies. During filming she wore a prosthetic on her nose to make her more closely resemble the princess, worked with a voice coach and studied Diana's body language in an effort to provide a valid impersonation. "She had a very expressive face," she told the newspaper. "And she had that sideways smile we all remember, and those big eyes and a strong, athletic walk."

The Mail of Sunday interview ran as the Metropolitan police force said it was assessing new information about the deaths of Diana and Fayed. Sky News said it had come from the former parents-in-law of a former soldier and had been passed on by the Royal Military police. The information is thought to include the allegation that the Princess of Wales, Fayed and their driver Henri Paul were killed by a member of the British military.

Diana, which was previously titled Caught in Flight, is due to open in the UK on 20 September and Australia on 10 October. It does not yet have a US release date.

More on Diana

• Alex von Tunzelmann on the history and politics behind Diana and Grace of Monaco

• Watch the trailer for Diana

• Peter Bradshaw on first footage from the film

• Naomi Watts: it's an honour to play Diana