Meghan Markle and Prince Harry say they believe Lilibet's princess title is a "birthright" in a new statement.
It comes after the couple confirmed their daughter was baptised on Friday as Princess Lilibet Diana earlier this month.
The christening took place privately at the Sussexes’ home in California with around 20 to 30 people in attendance for the celebration.
A spokesman for the couple said: "The children's titles have been a birthright since their grandfather became Monarch. This matter has been settled for some time in alignment with Buckingham Palace."
The royal family’s official website has been changed to reflect that the Duke and Duchess of Sussex’s children will use the titles prince and princess.
Archie and Lilibet are now listed as Prince Archie of Sussex and Princess Lilibet of Sussex.
The Duke and Duchess of Sussex's spokesman said: “I can confirm that Princess Lilibet Diana was christened on Friday, March 3 by the Archbishop of Los Angeles, the Rev John Taylor.”
Previously they featured on the line of succession page as Master Archie Mountbatten-Windsor and Miss Lilibet Mountbatten-Windsor.
The site's 'line of succession' previously described the Sussex children as Master Archie Mountbatten-Windsor and Miss Lilibet Mountbatten-Windsor.
Lilibet, one, and her older brother Archie, three, weren't given HRH titles at birth due to their position on the list - sixth and seventh, respectively.
Harry and Meghan are understood to be keen to not deny their children, both Lilibet and Archie, their birthright, but to allow them the chance to decide for themselves when older whether to drop or keep using the titles.
However, it is the first time Lili has been publicly referred to as Princess.
It is understood Lili's title of princess and Archie's title as a prince will be used in formal settings, but not in everyday conversational use by the couple.
When they were born, they were great-grandchildren of the Monarch, which meant they were eligible for HRH titles.
The rules set out by King George V in 1917 mean Archie and Lili, as the children of a son of a sovereign, are automatically a prince and a princess and also now have an HRH style if they choose to use it.
It was the same situation for Prince William and Princess Kate's children Prince George, Princess Charlotte and Prince Louis, however the Queen stepped in to change the rules.
Prince George needs to be a HRH as he will one day be king.
However, as Harry is less senior than his brother William, it didn't apply to his children.
When Charles became King in September last year, Archie and Lilibet became the grandchildren of a Monarch which changed the roles.
Following the christening, Buckingham Palace said the royal website “will now be updated in due course” to reflect the titles.
