has been lying low ever since nude photos
, taken during his weekend of debauchery
in Las Vegas, hit the Internet
But according to the Palace, the Party Prince, 27, has nothing to be ashamed of.
"He didn't do anything unlawful," a Palace source tells PEOPLE in this week's cover story. "What he did was entirely his own business."
And according to sources and royal watchers, as third in line for the throne, behind his father, Prince Charles, and brother William, 30, Harry won't likely be changing his stripes any time soon.
In the coming days, he's set to resume official duties in London: attending the Paralympics
on Aug. 31., and the WellChild
Awards ceremony on Sept. 3.
"Harry is a big boy now," says Dai Davies, former head of royal protection services. "He knows the rules, but he thinks, I'm going to do whatever I want."
For much more on the scandal and about Harry, pick up this week's issue of PEOPLE, on newsstands Friday