Richard Tomlinson said the way Diana died bore an "eerie similarity" to assassination plans he was shown in 1992. He said documents shown to him by an MI6 officer suggested three ways that the Serbian President could be murdered.
One way was to kill him "in a staged car crash, possibly during one of his visits to the ICFY (International Conference on the former Yugoslavia) in Geneva".
It "even provided a suggestion about how this could be done, such as disorientating Milosevic's chauffeur using a blinding strobe light as the cavalcade passed through one of Geneva's motorway tunnels".
Witnesses to the events of August 31, 1997, claim to have seen a "bright white flash" in the Alma tunnel in Paris moments before the crash in which Diana and Dodi Fayed died.
After watching a documentary on Diana's death, Tomlinson wrote a letter to the French authorities containing details of the plans. Yesterday, the inquest was told that an unnamed MI6 officer had confirmed he had written a document, but it was not about Milosevic.
He said it referred to a figure in the Balkans who had been involved in genocide.
Mr Tomlinson, 44, giving evidence via videolink from Marseilles, said: "I can't dispute that, because I can't specifically remember now, and it may be that it was someone else. But the fact is, they did propose to assassinate someone."
He added: "MI6 do have the capacity to stage accidents, whether by helicopter, aeroplane or car."