He exposed himself twice in his office in London in 1979 or 1980 after the woman went there for interviews about a film role, she told his indecent assault trial.
She said at Southwark Crown Court that at the first interview he exposed himself and held his penis in his hand before criticising its size, calling it "useless" and asking "How can I satisfy a woman with this?".
He twice promised the film's Italian director or producer would call her but she told the court when a man with an Italian accent called her he talked about Mr Clifford's penis.
In the second call she twigged the Italian accent was false and realised it was Clifford, she told the court, so she hung up.
The former model is not a complainant in the case.
Defence barrister Richard Horwell, QC, told the woman, who cannot be identified for legal reasons, that because she described Clifford's penis as "tiny", she could not have seen it.
He said: "His is an average-sized penis. That shows you cannot have seen it."
She replied: "I did notice that it was small."
Clifford, from Hersham in Surrey, is accused of 11 counts of indecent assault against seven women and girls. He denies the charges.
The trial continues.