Prince Harry should face disciplinary action for calling an Asian soldier "our little Paki friend", critics said last night.

The third in line to the throne apologised after film footage emerged of him making the racist comment while training at Sandhurst military academy. The film was recorded by the prince himself three years ago when he was 21. Another video showed him describing another officer cadet a "rag-head".

Campaigners said the apology did not go far enough and he should be reprimanded by the Army for his behaviour. Other soldiers would be asked to resign immediately, critics said.

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The comments triggered fresh criticism over his suitability as an Army officer. Prince Harry, who once went to a fancy dress party as a Nazi, has rehabilitated his image in recent years, including carrying out a tour of duty on the frontline in Afghanistan.

St James's Palace insisted that although the terms were used without malice, Prince Harry understood how offensive the term "Paki" was. The film was obtained by the News of the World. Prince Harry was heard speaking behind the camcorder as he videoed different colleagues. When he passed over an Asian soldier he stopped, zoomed in, and is heard to say: "And here is our 'Paki' friend." Then he moved on to someone else.

The trainee officer – identified as "Ahmed" – was unaware of the racist comment. In a separate incident, Prince Harry, about to start training as a combat helicopter pilot, was heard saying to another officer cadet: "Fuck me, you look like a rag-head".

The video reportedly showed the Prince on manoeuvres while still an officer cadet at Sandhurst.

Watch the video here

The newspaper also said the Prince was filmed being disrespectful to his grandmother, the Queen, the Commander in Chief of the Army, in front of other cadets.

With his Army friends watching, he is filmed making a joke call to her, saying: "Granny, I've got to go, got to go. Send my love to the corgis and Grandpa." He signs off by saying in front of them: "Bye. God Save You... yeah, that's great."

Responding to his use of the word "Paki", a spokesman for St James's Palace said: "Prince Harry fully understands how offensive this term can be, and is extremely sorry for any offence his words might cause. However, on this occasion three years ago, Prince Harry used the term without any malice and as a nickname about a highly popular member of his platoon. There is no question that Prince Harry was in any way seeking to insult his friend."

The spokesman added: "Prince Harry used the term 'rag-head' to mean Taliban or Iraqi insurgent."

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A Ministry of Defence spokesman said: "Neither the Army nor the Armed Forces tolerates inapropriate behaviour in any shape or form, and all substantive allegations are investigated."

"We are not aware of any complaint being made by the individual," the spokesman added.

Royals behaving badly: A collection of princely blunders

January 2002 Prince Harry admits smoking cannabis, but is not charged.

October 2004 The prince is involved in an altercation with a photographer outside a London nightclub.

January 2005 Harry, now aged 20, wears a Nazi swastika, on a German Afrika Korps-style uniform, to a fancy dress party.

March 2007 After nearly coming to blows with another photographer, Prince Harry falls into a gutter outside Boujis nightclub, where he had spent the evening downing cocktails.

April 2008 Prince William uses a military Chinook helicopter to fly himself to a 72-hour stag party for cousin Peter Phillips on the Isle of Wight, costing £5,000 an hour.

December 2008 Prince Edward is caught on camera apparently lashing out at his black Labrador. The RSPCA later said there was insufficient evidence to mount a prosecution. JM