Buckingham Palace is to undergo a major 10-year refurbishment, costing nearly £370 million.
It had been thought the Queen may have to move out temporarily but a 10-year phased option will see the palace remain open and the monarch in residence throughout the works.
The refit, described by officials as "essential", will include replacing boilers, and miles of cables, pipes and electrical wires when it begins in April next year, subject to Parliamentary approval.
The money will come from a 66 per cent increase in the Sovereign Grant - the funding formula for the monarchy's official duties - for the 10-year period, with the total works estimated to cost £369 million.
When the work is finished in 2027, the grant should be returned to its current level of 15 per cent, a review by the Royal Trustees - Prime Minister Theresa May, Chancellor Philip Hammond and Keeper of the Privy Purse Sir Alan Reid - recommended.
Deputy Keeper of the Privy Purse and accounting officer to the re-servicing programme Mike Stevens described the plan as the 'most cost-effective way to fund this essential project, by synchronising the release of funds with the phased approach to carrying out the physical works'.
Master of The Queen's Household Tony Johnstone-Burt said the refurbishment would ensure the palace is 'fit for purpose' until 2067.
He said: "We take the responsibility that comes with receiving these public funds extremely seriously indeed; equally, we are convinced that, by making this investment in Buckingham Palace now, we can avert a much more costly and potentially catastrophic building failure in the years to come."
It is estimated that the benefits of the upgrade, including longer summer opening hours, more private tours and savings due to the improvements, could be around £3.4 million each year.
It is also forecast that the work, taken wing by wing, beginning with the front of the London landmark after essential works are completed in the first two years, will reduce the palace's carbon footprint by 40 per cent in the future.
The Queen spends around a third of the year hosting garden parties, receptions, investitures and other events at her official home.
The work needed reflects the age of the building, which was first used as a royal palace by Queen Victoria and has not been decorated since 1952, the year the Queen ascended the throne.
The Queen, the Duke of Edinburgh and the Prince of Wales are 'completely supportive' of the refit, officials said.