London - The public cost of the British monarchy rose by just under £1 million last year to £33.3 million ($51 million, 39 million euros) but fell in real terms, palace accounts revealed on Thursday.

Diamond jubilee celebrations marking Queen Elizabeth II's 60th year on the throne made the 2012/13 financial year "challenging", Buckingham Palace said.

But it added that the British taxpayer was paying £3 million less for the monarchy than five years ago once the figures were adjusted for inflation, due to falling travel costs and a rise in royal incomes.

The 87-year-old monarch has been scaling back the gruelling travel schedule that has kept her jet setting for six decades, and is increasingly handing over duties to younger royals.

The queen's official expenditure rose by £900,000 in 2012/13, when the grant was set at £31 million including an extra million pounds to pay for the diamond jubilee. An additional £2.3 million was drawn from reserves.

"In the year of the queen's diamond jubilee and the London Olympics the royal household has achieved a real terms reduction in expenditure on supporting the queen's official duties," said Sir Alan Reid, who as Keeper of the Privy Purse is head of palace financial management.

"The royal household has continued to reduce its expenditure funded by the taxpayer in successive years since 2008-9 achieving a real terms reduction of 24 per cent over the last five years."

The accounts revealed that £1 million has been spent renovating the Kensington Palace apartment which will be the London home of Prince William and his wife Catherine once their baby is born.

The baby, who will be third in line to the throne, is expected in mid-July and the new parents are expected to move in a few months later.

The £1 million has been used to remove asbestos and repair the roof of the apartment, while the cost of decorating the rooms will be met privately.

Meanwhile royal travel cost the British public £4.5 million in 2012/13, down from £5 million a year earlier.

The queen and her husband, 92-year-old Prince Philip, toured Britain to mark the jubilee while other royals travelled the globe.

The accounts were published as royal officials announced that the queen's income will rise by five per cent next year after the Crown Estate, a vast property empire from which she draws her funds, reported record profits.

The Sovereign Grant, which pays for the queen's official duties and upkeep of royal properties, will rise from £36.1 million (42.5 million euros, $55 million) this year to £37.9 million in 2014.

Under a new funding arrangement agreed in 2011, the grant is set at 15 per cent of the profits of the estate from two years previously. The rest of the profits go into the public coffers.

Counting London's famous Regent Street and Windsor Park among its properties, as well as almost the entire seabed around Britain, the estate is now worth more than £8 billion.

It announced record profits of £252.6 million in the financial year to March 2013, up from £240.2 million the previous year.