The US has made an official demand of the UK, with the Department of Justice asking that Prince Andrew be handed over to face questions over his links to disgraced financier Jeffrey Epstein.
The Prince has resisted all previous attempts by US authorities that sought to have him shed light on Epstein's network of paedophilia and sex trafficking.
The Sun has reported that a frustrated US Department of Justice has now gone directly to the British Home Office to force the embattled royal to testify.
The US has reportedly filed a "mutual legal assistance" (MLA) request.
MLA requests used in criminal cases under the two countries' legal treaty.
It means Andrew could now be forced to appear as a witness within months.
The Sun reports that no decision has been made by the British and Prince Andrew is likely unaware of the development, as MLA requests are made in secret.
"It's a huge statement of intent from the US and it moves Andrew into the realms of a criminal investigation. It's also frankly a diplomatic nightmare," a source told The Sun.
"The DoJ does not make a request of this nature lightly, especially one involving a senior member of the British royal family.
"It puts the UK government in a very difficult position – and the Duke of York even more so."
Unlike the Queen, Prince Andrew does not have sovereign immunity from prosecution but if he is forced to testify he might still be able to do it from behind closed doors.
Andrew could still choose not to answer questions if forced to testify, but legal experts have warned that such a decision could have dire consequences.
Last month, ex-federal prosecutor Evan T Barr told a US law journal: "While the Prince would retain the right to decline to testify under the Fifth Amendment to the United States Constitution, the impact on his already diminished reputation would be considerable and an adverse inference could be drawn against him in the related civil litigations, leading to a possible default judgment."
FALL FROM GRACE
Prince Andrew stepped down from his royal duties after a "car crash" interview with the BBC last November, which saw him deny any sexual relationship with Virginia Roberts Giuffre.
Giuffre alleges that she had sex with Andrew three times, twice while underage, in liaisons organised by Jeffrey Epstein.
There have been numerous allegations since about the extent to which Andrew was aware of Epstein's activities and a growing willingness on the part of US authorities to push for him to testify.
In January, the lawyer heading the Epstein probe said that Andrew had "provided zero co-operation".
Geoffrey Berman later said the Duke had "now completely shut the door on voluntary co-operation" and warned: "Our office is considering its options."
Epstein, 66, was found dead in his cell last August while awaiting trial.