Carole White’s testimony took most of the afternoon
She said Mr Taylor had promised the model the diamonds during the meal.
The account contradicts evidence given by Ms Campbell, who said she did not know who had given her the gems.
Prosecutors say Mr Taylor traded with rebels in Sierra Leone, giving them weapons in return for diamonds.
Tens of thousands of people died in interlinked conflicts in Sierra Leone and Liberia in the 1980s and 1990s.
Mr Taylor denies 11 charges at the Special Court for Sierra Leone, sitting in The Hague, and he has denied having anything to do with the trade in so-called blood diamonds.
According to Ms White, Mr Taylor and Ms Campbell had been “mildly flirtatious” with each other at the 1997 dinner in South Africa, hosted by Nelson Mandela who was the country’s president at the time.
Mr Taylor told the supermodel during dinner that he would send some men to give her diamonds, Ms White told the hearing.
“We were sitting around this lounge area at about 10 o’clock at night and we were waiting for these men to arrive,” Ms White said.
“She was in communication with them by phone – most likely by text. Someone was informing her that the car was nearly there.”
Ms White said Ms Campbell was “very excited” about the diamonds.
“The guys came in and they sat down in the lounge and we sat opposite them… they then took out a quite scruffy paper and they handed it to Miss Campbell and said ‘these are the diamonds’,” she said.
• Rough diamonds used by rebel groups to finance wars against governments
• Fuelled conflicts in countries such as Angola, Ivory Coast, Sierra Leone and DR Congo
• The 2003 Kimberley Process requires its 49 members, who represent 75 countries, to certify shipments of rough diamonds as “conflict-free”
• Critics question the system, saying countries with the worst wars have weak internal controls
“She opened them and showed them to me. They were quite disappointing because they weren’t shiny.”
Earlier on Monday, US actress Mia Farrow, who was at the dinner, had also testified that Ms Campbell had been excited by the gift.
Last week, Ms Campbell told the hearing that two men had come into her room in the middle of the night and given her a pouch of stones, and that she did not know who had given her the gift.
She told the court she had given the stones to Jeremy Ractliffe of the Nelson Mandela Children’s Fund the next morning because she wanted them to go to charity.
Mr Ractliffe has now handed the gems to police, and on Sunday they confirmed that the stones were real diamonds.
Mr Taylor, 62, was arrested in 2006 and his trial in opened in 2007.
The former warlord is accused of arming Sierra Leone’s Revolutionary United Front (RUF) rebels during the 1991-2002 civil war – a charge he denies.
Prosecutors say that from his seat of power in Liberia, Mr Taylor also trained and commanded the rebels who murdered, raped and maimed Sierra Leone civilians, frequently hacking off their hands and legs.
The Sierra Leone war became notorious for the widespread use of child soldiers.