The chance meeting, during the second week in June, was said to be amicable and lasted under an hour with just 16-year-old William, Mrs Parker Bowles and the Prince of Wales present.

Prince Harry, 13, was not at the palace as he was still at Ludgrove, his Berkshire boarding school.

Royal insiders now expect Harry to meet Mrs Parker Bowles for the first time sooner rather than later.

A spokeswoman for the Prince of Wales confirmed that the meeting had taken place.

But she added that any meetings between William and Harry and their father's long-time partner were "a private family matter".

William, who broke up early from Eton after his GCSE exams, first met Mrs Parker Bowles on June 12 and they have since seen each other a couple more times.

It was clear that William and Harry would meet Mrs Parker Bowles sooner or later.

Palace insiders had speculated that introductions would come before Charles's milestone 50th birthday in November.

Mrs Parker Bowles now spends time - and the night - at Highgrove, the prince's Gloucestershire country residence and also at St James's Palace in London, where Charles, William and Harry have recently moved into a new apartment.

It was inevitable that the teenage princes would meet Mrs Parker Bowles as they too - after their mother's death - spend more time with their single-parent father.

Before her death 10 months ago Diana, Princess of Wales blamed Mrs Parker Bowles for the failure of her marriage.

Diana complained, in her controversial November 1995 Panorama interview, that there were three people in her marriage.

In a loving relationship which has endured for more than 20 years, the Prince of Wales and Mrs Parker Bowles have attempted to preserve some degree of privacy.

But their relationship was the worst kept secret in Royal circles.

Mrs Parker Bowles has been a tower of strength for the Prince of Wales following Diana's untimely and distressing death, just a year after the royal divorce.

Publication by the Sun newspaper of news of the meeting was delayed for 24
hours, at the request of the Prince of Wales, to allow time for William to return to Highgrove and be informed of the breaking story by his father.

A spokeswoman for the Prince of Wales said: "Yes, Prince William and Mrs Parker Bowles have met.

"Meetings between the children and Mrs Parker Bowles are a private family matter which we are not prepared to discuss and we wish, for their sakes, the media will now leave this very personal matter alone.

"We regard this as a private matter and expect the Press and TV to treat this as they would any other family's private business.

"Provided the children are now left alone and that the fact of William's meeting does not spill over into acres of intrusive, speculative gossip, we believe drawing a line under this now is in the best interests of the children.

"We have written to Lord Wakeham, chairman of the Press Complaints Commission, to inform him of this statement. We have no complaint about the facts of this story being published.

"However, we felt Lord Wakeham needed to be informed of our concerns about future coverage."

Lord Wakeham said in a statement: "St James's Palace has this evening written to me to draw my attention to the story in the Sun and to their statement this evening.

"I fully understand and support their position.

"I would like to underline what the palace has to say about the importance of ensuring that newspapers - and indeed broadcasters - remember that this is at heart a family matter, and therefore private under the terms of the industry's code.

"I am sure all editors, in support of that code, will respect the palace request that the family from now on receive the privacy to which it is entitled."

Press Complaints Commission chairman Lord Wakeham, who was consulted before the story appeared, said Prince William should now be left alone.

"Prince William is, of course, very important and people have the right to know about how he is growing up.

"He also very much has a right to his privacy and this, at heart, is a family matter.

"The information, having been confirmed, I hope very much that people will now leave him alone," he told the BBC Radio 4 Today programme.

"My main concern is the protection of Prince William and his privacy and that, by and large, has been a pretty good success.

"But I recognise that certain stories have a public interest. The Palace thought this one had, it was justified, and in the circumstances I think it has been handled very responsibly," he said.

The press had struck a balance in its attitude to Prince William between respecting his right to privacy and the public right to know.

"I think it hasn't worked too badly over the years. I shall watch very carefully. It is very easy for it to go wrong and one must be ever vigilant," he said.

"The code is working now, I hope, so that editors stop and think about their responsibilities, not looking at the small print and thinking 'can we get this one past John Wakeham or can't we?"