London: The newly-wed couple Prince William and Kate Middleton are planning to settle down at Kensington Palace, where Princess Diana lived.

Although Queen Elizabeth II has offered Buckingham Palace to the couple, Prince William prefers to live at the same palace where he grew up.

According to a leading newspaper, when William and Kate return from their eventual honeymoon, they will decide on a London residence.

"It is likely to be Kensington Palace, once the home of Diana, Princess of Wales, William's mother," a source said.

For the time being, William and Kate will continue to share an apartment with Prince Harry at Clarence House when they are in London, before they shift to Kensington Palace.

Kensington Palace is a royal residence set in Kensington Gardens in the Royal Borough of Kensington and Chelsea in London. It has been a residence of the British Royal Family since the 17th century.

It was the official residence of Diana, Princess of Wales until her death in 1997.

(Agencies)