The ‘This Is It’ singer performed for the late princess – who died aged 36 in a car accident in 1997 – at the Children’s Royal Variety Performance at The London Palladium in 1990 and she recalled how “nervous” and ill at ease the royal appeared to be.
She recalled to News.com.au: “She was very young. She was very nervous. They were her first Royal engagements where she was on her own.
“I remember looking at her thinking, ‘You look like you dressed up as a woman who’s 80 years old.’ It was really like she’d been styled by the queen’s mother.
“She was just the little Princess Diana with the chin down, looking up at you. And I felt sorry for her, because you could feel the nerves.”
Dannii admitted “nothing prepared her” for the surreal occasion.
She said: “You’re suddenly backstage at the Palladium waiting to meet a very young Princess Diana in a line-up with The Rolling Stones. Nothing.”
The former ‘X Factor’ judge may have been critical of Diana’s style at the time, but she acknowledged the princess “found her fashion mojo” years later.
Elsewhere in the interview, Dannii admitted it was hard to step out of her sister Kylie Minogue’s shadow when she first launched her pop career in the UK.
She said: “It was crazy. My sister was already there and she’d been in ‘Neighbours’, she’d released a lot of mu already. It was absolute hysteria.
“I came from Australia, where I grew up on TV, and everybody knew me from ‘Young Talent Time’, and then I went to London and then I was the girl from ‘Home And Away’ who’s Kylie’s sister.
“And I had a good five years of that: every introduction was, ‘You’re Kylie’s sister.’
“The hardest question was people would always say, ‘Oh, so you’re doing mu now, because your sister does it?’ And I said, ‘No, I’ve been singing professionally since I was 10 years old, but great. Cool.’ “