PRINCE William and Kate Middleton have named their daughter Princess Charlotte - a decision which will be seen as a touching tribute to Prince Charles.
William and Kate have also recognised the queen and the Duke's mother Diana as their daughter's full name is Charlotte Elizabeth Diana.
Naming their baby Charlotte, which is the feminine form of Charles, is a gesture sure to have pleased the heir to the throne, who made no secret of the fact he wanted his second grandchild to be a girl.
William's uncle Earl Spencer tweeted his approval of the names chosen by the Cambridges soon after their announcement.
"Perfect names. My 2-year old Charlotte Diana will be thrilled at cousinly name-sharing. Is at an age where thinks world revolves around her!," he wrote.
William and Kate have given their daughter a traditional name which has strong royal connections as a number of princesses and a Queen have been called Charlotte.
The Princess, who was born on Saturday at 8.34am, weighing 8lbs 3oz, is fourth in line to the throne and the queen's fifth great-grandchild.
Kensington Palace said in a short statement: "The Duke and Duchess of Cambridge are delighted to announce that they have named their daughter Charlotte Elizabeth Diana.
"The baby will be known as Her Royal Highness Princess Charlotte of Cambridge."
The betting industry is estimated to have paid out over €1.35m to punters who guessed the name correctly, according to Ladbrokes.
It had been heavily backed and was a favourite during the week before the name Alice reclaimed the top spot.
"Charlotte was the hot tip over the weekend and royal watchers up and down the land are quids in," said Ladbrokes spokeswoman Jessica Bridge. "We may have lost a fortune but we're paying out with a smile and wish the Duke and Duchess all the best."
Bookies William Hill said they were breathing a sigh of relief that William and Kate picked Charlotte, and not their favourite Alice.
Spokesman Rupert Adams said Charlotte finished as their 3/1 second favourite, with 5,096 punters correctly guessing the name and in total they would pay out just over €135,000 in the name market. One lucky royal fan in the UK has won almost €2,000 after placing more than €500 on the correct name at odds of 5/2 on Saturday evening.
The baby princess will join a host of famous women with the same name from the 19th-century writer Charlotte Bronte and Welsh singer Charlotte Church to the actress Charlotte Rampling.
The name is also likely to become popular with parents in the coming years. At the moment, it is languishing outside the top 10 most popular girls names for last year, as compiled by the website www.babycentre.co.uk.
Top is Sophia, followed by Emily and then Lily. Charlotte is only 17th in the list.