Prince Harry and Meghan wanted to move to Windsor Castle but were given Frogmore Cottage, a new book has claimed.
During their relocation from Kensington Palace, the Duke and Duchess of Sussex reportedly hoped for a suite of apartments at the royal residence.
But according to Lady Elizabeth Anson, who was a close friend of the Queen and died in 2020, the monarch made the "generous gesture" of giving them the cottage instead.
She described the home in Windsor as a "big deal" to the Queen, who reportedly said: "I hope they'll respect it."
The claim was made in 'The New Royals', a book written by Katie Nicholls, which explores the relationships between Harry, Meghan, William, Kate and the newly crowned King Charles III over the years.
In an extract published by the MailOnline, Lady Elizabeth is quoted as saying: "The cottage was a big deal.
"The Queen's entrance into the gardens is right next to their cottage. It is essentially her back yard, her solitude, and her privacy.
"She was giving that up in gifting Harry and Meghan Frogmore Cottage. We all thought it was very big of her.
"She said, 'I hope they'll respect it.' "
The latest claims come as the Duke and Duchess of Sussex return to California following the Queen's funeral.
The rift between the Sussexes and other members of the Royal Family has been seen in headlines over the past couple of years where Harry and Meghan have been critical of their life in the UK when talking to American media since their move to the US.
The death of the monarch brought Charles, William and Harry together once again as they mourned and walked behind her coffin in several processions - and attended her funeral with their wives.
And speaking afterwards, TV host Gayle King, who is a friend of Meghan, said: " There have been efforts on both sides … to sort of make this right.
"Big families always go through drama, always go through turmoil. It remains to be seen — are they going to be drawn closer together or are they going to be drawn apart?
"I have no idea, I have no inside information on that, but I will tell you this: It was good to see Harry standing with his family."