The deal, first mooted by Prince Charles 20 years ago, gives the Queen a 15% slice of the profits from the Crown Estate and guarantees her income can never fall in cash terms. The Treasury has confirmed there will be no direct cap on the deal.
The Crown Estate is a property empire worth £6.6bn whose assets include London's Regent Street, 265,000 acres of farmland and the entire UK seabed out to the country's 12 nautical mile limit. The Royals are now in line to earn around £34m from that property portfolio in 2013.
Chancellor George Osborne slipped this plan into his spending plans speech last December and at the time one Government source said; "The Royal Family must have been getting the champagne out once we conceded this." The FT said it puts the constitutional clock back 250 years.
The deal replaces the current Civil List arrangement, therefore removing the role of Parliament in approving the money the Royals get. The Treasury retains some control but, according to constitutional expert Professor Robert Hazell, this will be away from proper Parliamentary scrutiny.
Even some Coalition members are said to be worried that this threatens to undermine the principle that the monarchy exists only with the consent of the people. Palace officials were said to object to having to go "cap in hand to ministers every time we want something".
Income from the Crown lands was surrendered to Parliament when George III came to the throne in 1760, along with the abrogation of the costs of civil government. In return, the Civil List was established, creating a compact seen as an integral part of the constitution.
So, as critics have pointed out, the Crown Estate is not the property of the Queen but exists to fund Government and public services. The new deal undermines that key agreement. And there's also worry about what this means for the role Prince Charles sees for himself.
Having now secured a share of the Crown Estate income, Charles will be freer to offer his thoughts to ministers, so we can perhaps expect more efforts such as the infamous "monstrous carbuncles" missive.