Elizabeth Emanuel admitted that she would be sad to sell the distinctive pink chiffon garment - worn on loan by Lady Diana Spencer in a Vogue magazine photo shoot in late 1980 shortly before her engagement to the Prince of Wales - but felt it was time to "move on".
The blouse, along with a 16-inch miniature of the Princess's wedding dress, is being sold in an internet auction of her work dating back to the late 1970s, partly to help pay for a relaunch of her career after a failed business deal left her in financial trouble.
It was this blouse which first attracted the Princess to Ms Emanuel and her former husband David's London studio, leading to the couple being selected to make her wedding dress in the summer of 1981.
The photograph taken by Lord Snowdon showing Diana wearing the distinctive blouse appeared in the magazine shortly before her engagement to the Prince of Wales was announced.
"We got a phone call from Vogue magazine asking us if we had anything that we could lend, a blouse with a high neck, that could be warn by a very famous personality," Ms Emanuel said.
"They didn't say who it was, we didn't know at the time it was for Diana, when we did find out we were very excited."
Attracted by the blouse, Diana visited the studio and soon chose the black dress she was to wear for on her first official public engagement. She also commissioned them to design the wedding dress itself.
"It is really the garment that started it all off, the relationship between Diana and ourselves," she added.
More than 200 items, including dresses worn by the actresses Elizabeth Hurley and Helena Bonham Carter, are being sold.
"It is sad, especially for me, but I don't know what to do with them ... There comes a point where it is so expensive to store."
Although she said that the auction had been discussed for a long time, she admitted that recent financial difficulties had acted as a spur.
Ms Emanuel has spoken publicly of suffering money problems after a hoped-for deal with the investors, to build up her business, fell through.
"We decided to do this quite a long time ago but it is particularly helpful at the moment, just to move forward, ... Certainly it is going to help the situation at the moment, it has been very difficult for the last few months."
A miniature of the wedding dress made from the original material will also be sold in the auction which is being organised by Auction Atrium, will take place between November 3 and 13 on the website www.auctionatrium.com.
Ms Emanuel said that she had no idea how much the items would fetch.