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The politician for Kensington and Chelsea - which is the royal borough of London - made the derogatory remarks at a fringe event at the party's annual conference in Brighton, according to The Telegraph.
"Harry can't actually fly a helicopter so they had to make him co-pilot. So he just sits there going 'vroom vroom'", Coad is reported to have told the audience.
She went on to comment that Harry and William are "not that bright", before adding: "Just let them drift away, be playboys or whatever."
Prince Harry has served in the army for a decade and qualified as an Apache helicopter commander in 2013 - meaning he was able to take overall control of the helicopter on missions. He also completed two tours of Afghanistan, and was promoted to the rank of captain.
"He's been mucking about for years, he's not been a faithful husband."
She then declared herself "the royal family's worst nightmare", and announced that she turned down an invitation to meet the Queen when she was elected.
Senior Labour MP John Woodcock has since apologised on behalf of the Labour Party, and said her comments do not represent the views of the party.
Posting on Twitter, Woodcock's statement read: "I want to make clear that the highly inaccurate statements reportedly made by one of our colleagues, which disparage Prince Harry's military service, in no way reflect the views of my party.
"Like everyone who puts themselves in harm's way to keep us safe, His Royal Highness deserves nothing but praise and respect for his service in the armed forces. I am really sorry this has happened."
Meanwhile, Harry has been hosting the Invictus Games in Toronto, during which he has made his first public appearance with Suits actress girlfriend Meghan Markle.
I mean, the MP didn't hold back, did she?
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