She has due to announce work promoting healthy foods in the new year

Fergie is looking slimmer and happier than ever before

She looked like a new woman. Slimmer than ever and bursting with an exuberance they haven’t seen for years. The Duchess of York has lost almost four stone. Something’s up.

That much was clear to party-goers at Windsor Castle who helped her celebrate a double birthday: the 21st anniversary of her charity Children In Crisis and Fergie reaching the age of 55. She was her old self.

When the Queen offered her favourite home to her former daughter-in-law for the dinner it was more than just a symbolic gesture.

She knew how happy this would make Prince Andrew, under whose royal roof the Duchess continues to live 18 years after they divorced.

And what an occasion it was (even if a little brash) as dinner was served in the Great Hall to 200, including Kate Moss and Prince Harry’s on-off girlfriend Cressida Bonas.

Other guests included rich business friends such as property developer Nick Candy and mobile phone tycoon John Caudwell. Naturally, Princesses Beatrice and Eugenie were there with their boyfriends.

There was opera from Lucy Kay, the runner-up in Britain’s Got Talent, and several other musical acts including singer-songwriter Natasha Bedingfield and the all-girl German classical quartet Salut Salon.

Fergie loved it all, sitting in the castle immediately beneath a bust of Queen Victoria. She was next to millionaire businessman Sir David Tang and on the same table as her former husband, who was beside the broadcaster Sir David Frost’s widow Lady Carina.

‘Sarah looked so at home,’ says one of the guests. ‘She had lots of diamonds flashing around her throat and looked really fantastic, better than I’ve seen her for years.

‘Her face was a picture, a huge smile, as everyone sang Happy Birthday. She was so happy you could almost think the Queen had given her back her HRH.’

But there was something else that people noticed about Fergie. One guest called it a ‘calmness’ that was quite new.

Perhaps this is not so surprising. For the fact is that something really is up — it’s the rebranding of Fergie. And where better to signal it to the world than at Windsor Castle?

The resurrection of Brand Fergie is a crucial element in secret talks she has been having in the U.S. to endorse healthy food.

It’s a brave move. Who would have thought she could be galvanised to risk launching a new business after what happened the last time she tried?

Seven years ago, she set about turning herself into a household brand name, endorsing products from jewellery and scented candles to fashion and food.

Her U.S. company, Hartmoor, also encompassed earnings from her children’s books, after-dinner speaking and TV appearances.

But with lavish offices overlooking New York’s Central Park and a large staff, its spiralling costs — plus Fergie’s extravagant spending — were soon outstripping her earnings and plunging the operation into debt well beyond £3 million.

It was at that time, four years ago, that a desperate Fergie offered ‘access’ to Prince Andrew for £500,000 to an ‘Indian business tycoon’, who turned out to be an undercover journalist at the now defunct News Of The World.

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The Duchess of York (left in 1988 and right at the Vienna ball in 1997) used to cut a noticeably larger figure

Following her divorce from Prince Andrew, Sarah Ferguson's weight has fluctuated. She is pictured sporting a fuller figure in 2010 (left) and 2009 (right)

This was a new low point for someone who’s had so many low points. But the former chalet girl Sarah Ferguson does seem to have a knack of being able to rise from the ashes.

And there are still investors — in the U.S. at least — who feel the Duchess of York’s title retains enough royal cachet to make a buck.

Some believed she made a big mistake when, for £1.4 million a year, she became an ambassador for Weight Watchers, with whom she eventually parted company.

Chief among those who thought a lot more money could have been made was handsome Wall Street banker J. Todd Morley, a one-time business adviser and president of the Sarah Ferguson Foundation charity, which closed two years ago.

So keen was Fergie on his money-making ideas that when he flew to London for business talks with her to impress him she sent her chauffeured Bentley (a £160,000 gift from an admirer, the Norwegian Findus frozen food magnate Geir Frantzen) to collect him from Heathrow airport.

Seven years ago, she set about turning herself into a household brand name, endorsing products from jewellery and scented candles to fashion and food as well as raking in money from her children's books

Where this would have led, we can only speculate. But Morley, a happily married man with three children, highly ambitious and very sensitive about his image, was horrified to learn people were wrongly suggesting he and the Duchess might be having an affair.

He backed away immediately from Fergie and the project never got off the ground.

But was Morley right about the Duchess’s selling power? The fact that others think he was, indeed, right has had an electrifying effect on her ambition, says a friend. And now, it seems, she is determined to stand on her own two feet.

Her first step towards commercial reincarnation was to become ambassador for the National Obesity Forum.

‘She realised that if she was going to be an ambassador, she was going to have to do something about her own weight, which has always yo-yoed,’ says a friend.

She set herself a target ‘to lose 50lb by my 55th birthday’.

It was clear to everyone at the Windsor Castle party that she has achieved it.

When the Queen offered her favourite home to her former daughter-in-law for the dinner it was more than just a symbolic gesture

These were just the first moves in the ultimate resurrection of the Duchess of York.

They set the stage for a major commercial onslaught in which she will endorse schemes to help people with eating problems.

An announcement about her new business enterprise is likely in the New Year. ‘Fergie really has one ultimate objective,’ says a close figure.

‘She wants to be financially independent enough not to have to rely on Andrew’s generosity. She wants to do it within two years.’

Just what could this mean — would she remain under Andrew’s protective royal custody or go?

For the past eight years, she has luxuriated in the Prince’s home, Royal Lodge, the Queen Mother’s gracious old house in Windsor Great Park.

He has spent more than £8 million on refurbishments, thanks largely to the £15 million (£3 million more than the asking price) he received from a Kazakh billionaire friend for Sunninghill Park, their former marital home nearby. He didn’t share these proceeds with Fergie.

After the house sold, it is understood that when the Queen asked what she wanted, Fergie replied: ‘Your friendship, Ma’am.’

Living permanently, and apparently contentedly, with Andrew — though, they insist, not as ‘man and wife’ — she is very much the mistress of the house.

Fergie has said her greatest pleasure of being there is walking in the woods and ‘meditating on the bluebells’.

In her 2011 memoir, Finding Sarah, she described her perfect man: ‘Someone who is good-looking . . . with a good sense of humour . . . believes in old-fashioned chivalry, is confident, sophisticated, intelligent and athletic . . .who has integrity, honesty and is family oriented, and who knows me better than I know myself.’

Since their divorce Prince Andrew has supported his former wife financially and allowed her to live in his home

She added: ‘I realise I have just described Andrew.’

A pity she didn’t seem to see him in quite that light when she was married to him.

Since the publication of the book, she has been keeping a relatively low profile, avoiding any outrageous gaffes and even declining TV appearances.

Meanwhile, she is working on a film project about Prince Albert and regularly attends meetings of the trustees of her two main charities, the Teenage Cancer Trust and Children In Crisis.

She’s also made quiet visits to West Africa twice in the past year to see charity staff at work.

Last year’s move to New York by her youngest daughter, Eugenie, to work for an online auction house gave Fergie a reason for monthly visits to the U.S.

At the same time, she was keeping up her old business contacts. When someone suggested a commercial rebirth, she did not need much persuading.

But the old Brand Fergie that cut such a swathe across America was viewed as dead. As one of her former public relations advisers said: ‘She threw away the golden opportunities that were presented to her when she left the Royal Family. Who on earth would buy anything with the Duchess of York’s name backing it now?

The revamped Fergie is proof, say experts, that you can still make a comeback

‘But times change and memories fade. A revamped Fergie can sell herself as proof that, however down you are, you can still make a comeback — that’s a very powerful selling message in America.’

The rebranding began, quietly, in the summer when Andrew arranged for her to stay at Balmoral with the Queen.

The visit was inevitably picked up by U.S. social commentators. You could almost feel the excitement of investors in Fergie’s name that she was no longer the royal outcast.

And there she was again, in Windsor Castle. Slim, full of exuberance, turning back the clock.

As for Andrew, four years ago on his 50th birthday, he made a comment that some of her friends thought in rather poor taste.

The father of two drew laughter when he described himself as a man ‘with three children’.

No such jest on this occasion. Instead, his affection for Fergie, despite all the scandal that has gone before, was clear.

As for the way she looked at him: ‘Well, maybe she really does see him now in the way she described her perfect man in her book,’ said one guest.

The inevitable chatter among close friends is on the continuing topic of whether they might remarry — after her implacable opponent Prince Philip, 93, is gone.