Facing a firestorm of criticism, Diana's siblings quietly squabble over the proper way to preserve her legacy.

In the ever-expanding sphere of Princess Diana memorabilia, there is this to be thankful for: The world will be spared official Diana underwear (that idea was scuttled by the Diana, Princess of Wales Memorial Fund). Still, collectibles in questionable taste abound. Recently, the Fund, of which Diana's sister Lady Sarah McCorquodale, 43, is president, endorsed Diana lottery tickets, tubs of Flora brand margarine and Diana teddy bears. And in July, when Diana's brother Earl Spencer, who turns 34 May 20, opens a museum in her honor at Althorp, the Spencer estate, visitors--after paying $16 to cover what the Earl says are set-up costs--will be able to peer at Diana's grave site and peruse the gift shop for commemorative goods.

In death, as in life, Diana has proven to be a moneymaker nonpareil. But now the task of continuing the princess's work--without exploiting her memory--is dividing the very keepers of her legacy: her family. On April 3, Earl Spencer--already under fire for charging admission to see Di's grave site ("It's ethically wrong," fumes one Diana pal)--wrote the Fund expressing concern over its commercial deals and told the Northampton Chronicle and Echo that "I do not believe Diana would have wanted the Fund to run forever." (Three weeks later, seemingly recovered from his outrage, he reportedly met with American TV producers about a Di documentary.) In a rare public utterance from her home on Scotland's Isle of Seil, Spencer matriarch Frances Shand Kydd attempted damage control; though she agreed with her son, she told Britain's Daily Mail on April 27 that they were both "immensely proud" of Sarah's work.

The Sunday Times, meanwhile, reported that Prince William, "angry and upset" over the exploitation of his mother, also wanted the Fund's life limited. ("The constant publicity is painful to him," says British Press Association royals reporter Peter Archer.) And back at the palace, Prince Charles was said to be furious that his son was dragged into the fray. Even British Prime Minister Tony Blair weighed in. "We are concerned," said his spokesman, "about overcommercialization."

McCorquodale, who has come under question for the Fund's endorsement choices and slow distribution of the $67 million in donations to charities, has yet to comment on her brother's letter, but fellow Fund trustee Vivienne Parry downplays the sibling contretemps. "Lady Sarah and the earl have a difference of opinion," she says, "not a major rift." Adds a Spencer aide: "Sarah was not upset by her brother's letter. They are all talking very much as family."

In any case, Sarah and her brother continue to live in Diana's shadow (the fourth Spencer sibling, Lady Jane Fellowes, 41, keeps a low profile befitting her marriage to the Queen's private secretary). Still residing in South Africa (where ex-wife Victoria lives with their four children), Spencer spends one week a month at Althorp (the site also of a Diana benefit concert on June 27), where he oversees the conversion of a stable block into the museum, which will house such memorabilia as Di's school lunch box and family film footage. "One of the most traumatic tasks I have taken on is editing my father's old cinefilm," Spencer told the Northampton Chronicle and Echo. "Diana and I are together in almost every frame." And he's working on his eulogy promise to watch over his nephews. "I keep them informed," he told the paper. "I try to see them every time I am in the country."

For her part, McCorquodale, who once dated Prince Charles, lives in Lincolnshire with her husband, Neil, a farmer, and their three children, and is in frequent contact with William and Harry (as is Fellowes). She makes the three-hour trip to the Fund's London offices twice a week. And if, as one veteran royal watcher says, "her qualifications are lacking because she's had no career," she is giving it her all. Says an ally: "She works incredibly hard."

Beleaguered or not, the Fund shows no signs of shutting down. "It will go forward," says fund-raising and events manager Paul Burrell, Di's ex-butler. In June, Andrew Purkis--a senior adviser to the Archbishop of Canterbury--steps in as chief executive, and trustee Parry says "the Fund will become something the British people are proud of." That would surely please the princess--who, if watching, can be counted on to see the humor in it all. About the margarine fiasco, the Daily Mail reported Sarah as saying, "I know exactly what [Diana] would have thought. She'd have said, 'Just think of it--me inside all those fridges.'"