PETER Phillips, son of the Princess Royal, was standing in the front row of a group of Gordonstoun pupils who shouted abuse at local youths before a brawl which left one man in hospital, it was claimed last night.

Witnesses alleged the 18-year-old royal was one of about 20 pupils from the school who became involved in a fight in the nearby seaside town of Lossiemouth, Moray.

Grampian Police yesterday afternoon confirmed it had launched an investigation into the alleged assault.

It is understood officers will interview pupils at Gordonstoun as part of the inquiry.

Unemployed George More, 20, underwent surgery at Dr Gray's hospital, Elgin, for a badly broken jaw following the incident two weekends ago outside Lossiemouth's Laverockbank Hotel.

Mr More, a former fisherman, said Peter Phillips was pointed out to him as ``the Queen's grandson'' earlier in the evening but he had not recognised him.

He told how he was ``out cold'' after being hit in the face with a beer bottle during the scuffle.

Last night his brother David, 17, said he saw the young royal among the pupils seconds before trouble flared.

``Peter Phillips was in the front row of a group who were shouting abuse at us and calling us things like peasants, but I didn't see where he was or what he was doing when the fighting started.''

Other onlookers claimed to have seen Peter in the group, but said they did not see him throwing any punches.

Gordonstoun staff said they had launched an internal inquiry into the incident and the school deeply regretted any involvement.

Spokesman James Thomas said: ``The school acknowledges there was an incident in which fighting took place.

``The school strongly deplores this type of behaviour and deeply regrets any involvement by Gordonstoun pupils.

``When anything like this happens, one would prefer it didn't happen. I very much hope the good relationship with the community through our sporting events and fire service will continue.''

Mr More's mother Grace, a former barmaid in the Bourbon Street public house where the argument that led to the fight began, said: ``The Gordonstoun attitude is a disgrace. The pupils come into town and call the locals peasants.

``They pay all those fees just to learn how to bottle people.''

Mrs More said that in the past there had been a few arguments between pupils and locals, but they had never come to blows.

The American-style public house was said to have been packed with Gordonstoun pupils celebrating their mid-term weekend break.

According to onlookers, one Gordonstoun boy challenged a local youth to a fight after he removed a chair from close to where the school pupils - many of them rugby players - were sitting drinking.

David More said Peter Phillips was one of a small group who tried to calm things down.

But as the locals left they were followed 200 yards to the Laverock Bank, where a fight between around 20 pupils and 10 locals erupted.

Police said there was no disturbance when officers arrived and the group of youths was eventually dispersed.

The #10,000-a-year Gordonstoun school has strong links to the royal family with Princes Charles, Andrew, and Edward among its former pupils.

The Duke of Edinburgh was one of the founding pupils in 1934 when it was set up by German educationist Dr Kurt Hahn.

The Prince of Wales disliked the school with its then harsh regime of cold showers. He later called it ``a hole''.

The school has since changed and now has girl pupils. It was chosen by the Princess Royal for her children Peter, 18, and Zara, 15, but not by the Prince of Wales for his son Prince William.

Its exclusive education standards attract children of the rich and famous from throughout the world.

Despite its royal links, it also prides itself on its place in the local community in Moray and the respect held for it among the locals.

But sometimes there is resentment between the local boys and the privileged sons of the wealthy at the school.

Residents in the surrounding area, particularly Lossiemouth which is a popular weekend venue for older pupils, claim the Gordonstoun students often act in a ``superior'' way and are rowdy in bars.

One local teenager said pupils created a feeling of jealousy outside the school grounds because ``they throw their cash and weight around and call some of the younger local boys peasants''.

Gordonstoun also places strong emphasis on sporting activities and achievement. The school's teams regularly take part in local and national tournaments.

It runs its own fully operational fire service - Peter Phillips is the team leader - which regularly attends moorland fires and small household blazes throughout Moray as part of Grampian Fire Brigade's retained service.