Penny's £1m revenge

Two months ago, Penny Lancaster suffered the humiliation of having Rachel Hunter - her boyfriend Rod Stewart's ex - swipe her £200,000 lingerie and swimwear contract.

But Lancaster had her revenge when she signed a deal worth five times the Ultimo contract with one of the world's top modelling agencies, Elite New York.

Unveiling the £1 million deal, she said: "I've just finalised the details so I'm in talks about some big new projects to come."

Elite boss Monique Pillard added: "Not only are we looking forward to exploring beauty and fashion endorsements for Penny but our film division has already been approached about her for commercial work."

Lancaster, 32, is making it clear in her discussions with Elite - which launched the careers of Naomi Campbell, Cindy Crawford and Linda Evangelista - that she never again wants to become the subject of a PR stunt like the one which saw Hunter replace her as the new Ultimo model in March of this year. So much so that she has vowed never to strip for a lingerie or swimwear shoot again.

Nick Young, spokesman for Lancaster's agent in London, Crawfords, said: "Elite is taking care of Penny across America now and we are handling her here.

"We are being very careful about which projects she will pursue. We have moved away from lingerie for good. The new projects in the offing involve much more upmarket clothing.

"And there will be no swimwear either. Penny will be covering up a lot more from now on."

In a thinly-disguised swipe at Hunter, Young added: "There are - and I'm not trying to name names here - certain girls who are happy to promote any item whatsoever and Penny has never been one of those.

"Penny would rather promote a product that she believes in and what in her view is a responsible and respectable product. She wouldn't promote anything just for money."

Lancaster was disposed of as Ultimo's poster-girl by bosses who said Hunter was the woman they always wanted because she was a "real international celebrity".

Lancaster's deal with Elite is set to change all that.

Stewart, 59, has been with Lancaster for four years. He remained aloof from the hostility between his current girlfriend and ex-wife - until finally exploding in a recent outburst.

Describing the boss of Ultimo, Michelle Mone, as "manipulative" he said: "Penny doesn't want to admit it but she has been hurt by all this. She's been in tears."

But Hunter, 35, may still have the last laugh. She is looking forward to the imminent arrival of a sizeable divorce settlement cheque from Stewart's estimated £100 million fortune.

After deciding to call off divorce proceedings last summer, they are now back on and Hunter has recently been seen house-hunting in Los Angeles. Last week she was also spotted being shown round a house in Notting Hill with a view to buying it.

Lancaster, however, is blissfully happy with Stewart, according to Mr Young, who said: "She's principally Rod Stewart's girlfriend and she wants to support him wherever and whenever she can."