A video purportedly showing one of the Queen's guards snorting a line of powder off a ceremonial sword while on duty is being investigated.
The 30-second mobile phone clip was mistakenly posted on a messaging service for troops, The Sun reported.
The officer, on duty at St James's Palace at the time, appears to snort the substance after another man is heard asking: "How much? Two inches?
"You want two inches of that? If you get rid of that that I'll be mightily impressed".
A woman can also be heard saying: "No, don't do it, for the love of God!"
The Sun reported that the officer still had 13 hours left on duty.
A Ministry of Defence spokesperson said: The Army expects all personnel to stick to its high standards and any found to fall short are disciplined robustly.
"An investigation is under way".
The Princess Royal and Princesses Eugenie and Beatrice live at St James's.