The income of Queen Elizabeth II is set to be reviewed by Prime Minister David Cameron-led UK government after public funding of the royal household surged to 40 million pounds last year. 

Talks between Buckingham Palace and the Treasury are expected to begin soon to negotiate a new deal on the Queen's income from the sovereign grant, 'The Sunday Times' claimed. 

The Queen receives the equivalent of 15 per cent of the profits of the Crown Estate, a vast property portfolio including Regent Street in London and Ascot racecourse in Berkshire. 

The system was introduced in 2012, replacing the civil list as the means of funding royal household expenditure on official duties, maintaining occupied palaces and paying the monarch's staff. 

Since then the grant has risen by almost a third, due to the commercial success of the Crown Estate. 

In its first year, the grant was 31 million pounds, rising to 36.1 million pounds in 2013-14 and to 40 million pounds in the current financial year. 

The royal trustees: Cameron, UK Chancellor George Osborne and Sir Alan Reid, keeper of the Privy Purse have powers to change the level of the grant if necessary. 

A temporary surplus is paid into a reserve fund, but if this grows to more than half the value of the annual grant then the trustees can reduce the grant. 

A Buckingham Palace statement said: "A review will take place after April 2016 to ensure that the grant provides the resources needed to support the Queen's official duties."