Zara Phillips and Mike Tindall are expecting a baby in the new year.
The exciting news comes as Prince William and Kate Middleton await the arrival of their first child who is due in the next few days.
"Mr and Mrs Mike Tindall are very pleased to announce that Zara Tindall is expecting a baby in the new year," a statement from the Palace read.
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Her parents Princess Anne and Capt Mark Phillips and Mike's parents Philip and Linda are said to be "delighted" with the news.
The baby will be Princess Anne's third grandchild and the Queen's fourth great-grandchild.
Speaking at the beginning of the year, 32-year-old Zara said that she and Mike had no immediate plans to start a family. "Before we got married, everyone was like 'When are you going to get married'," she said.
"Then as soon as we were, it was, 'When are you having kids?'. In the future we'll see what happens, but we're not, sort of, putting a date down."
Zara and Mike were a picture of happiness as they cheered on Andy Murray in the men's singles final at Wimbledon on Sunday afternoon.
The mum-to-be, who won a silver medal for eventing at the London 2012 Olympics, shows no signs of slowing down just yet. She competed at the Barbury horse trials near Swindon on Saturday. She was supported by her older brother Peter Phillips, his wife Autumn and their two darling daughters Savannah and Isla.
Uncle-to-be Peter is excited for his younger sister and her husband. "We had cousins growing up so it's always nice to have family, to have cousins to play with. It's fantastic."
When asked whether Zara would continue competing into her pregnancy, he said, "That's purely down to her. That's her decision."
David Cameron's official spokesman described the announcement as "quite terrific news", and told reporters, "The Prime Minister will send his very, very best wishes to the happy couple."
Mike, 34, used to play rugby for England. He is now a player-coach at Gloucester.
The sporty duo met in a bar in Australia in 2003 during the Rugby World Cup. They married at Canongate Kirk on Edinburgh's Royal Mile in Scotland in July 2011. Former England rugby captain Mike proposed to Zara at around Christmas time in 2010.
They sold their house in Cheltenham, Gloucestershire at the beginning of the year and it was reported that they planned to move into Princess Anne's Gatcombe Estate.
Zara already keeps her racehorses and three-day eventers there. Peter Phillips and his family also live on the estate.
All the news as Duchess Kate's due date draws close...