The couple have remained close despite divorcing in May 1996, focusing on maintaining a stable family unit for their daughters Princesses Beatrice and Eugenie.
But when asked during her appearance at a literary festival yesterday about rumours she might re-marry Andrew, Sarah replied: "He's still my handsome prince, he'll always be my handsome prince."
She added: "It's lovely that we are such a family and the story has a happy ending all the time.
"In our every day, we really respect each other and we honour each other and it's just lovely to have that sense of integrity, to what we believe is right; to what is good and compassion and love and kindness.
"And that's the way we are."
The Duchess was speaking to an audience of youngsters and their parents at the Children's Bath Literature Festival.
Sarah and Andrew are both said to live at Royal Lodge in Windsor Great Park and last month it was reported the Queen's former daughter-in-law visited the monarch at Balmoral with her family.
Royal watchers have described the meeting as significant as the Duchess did not make an appearance at any of the major royal events of recent years, like the Queen's Diamond Jubilee celebrations or the wedding of the Duke and Duchess of Cambridge in 2011.