Staff at Buckingham Palace will have to forgo their Christmas party after the Queen decided an "ostentatious" celebration would be inappropriate in the prevailing economic climate.
A decision has not been taken on whether the 600 members of the royal household will also miss out on traditional Christmas pudding anda personal gift from the Queen.
News of the frosty Christmas was broken to staff by the Lord Chamberlain, head of the Royal Household, in an email on the Buckingham Palace intranet.
A palace spokesman said: "The Queen is acutely aware of the difficult economic circumstances facing the country. It was decided it was appropriate for the royal household to show restraint and therefore not hold the party this year."
The Queen has been forced to plead poverty this year after her aides claimed she did not have sufficient public funds to repair her crumbling palaces.
The royal household is in negotiations with Prime Minister David Cameron and Chancellor George Osborne for an increase in the Civil List and the grants-in-aid which cover the costs of the royal family.
But the palace insisted yesterday that the money to pay for the £50,000 ($105,500) Christmas party and personal gifts would have come from the Queen's private income, not the public purse.
The ambassadors' Christmas party and the royal family's private celebration at Sandringham will be unaffected.
A palace source said it was untrue that the Queen could not afford to celebrate Christmas this year, she felt "this was not the right time for an ostentatious party".
Each year 600 staff at Buckingham Palace, Windsor Castle and Sandringham are invited to take a guest to the event. "There will still be a staff carol service and a turkey and sausage Christmas lunch," said the aide.
In recent years the Queen has embarked on an economy drive, cutting back on luxury items and extravagant receptions.
