The proposal, provoking incredulity among Tories and doubts about its political wisdom among Labour ranks, came as Buckingham Palace opened its doors to the public for the second summer running.
A new royal residence 'representative of the age we live in' where British skills in architecture and design could be shown off could be financed by selling the palace and Windsor Castle to a body such as the National Trust, and subscriptions in 'Palace Bonds' and donations, Ms Mowlam said.
Labour officials distanced themselves from a newspaper article containing the suggestions, which they said in no way represented party policy.
Ms Mowlam said: 'I don't regret having said it. I think the monarchy has to carry on changing and adapting and it is something positive.'
She insisted that such a change would only take place with the Queen's consent. 'I want a self- confident expression of Britain's monarchy in a royal palace for the 21st century.
Stephen Dorrell, Secretary of State for National Heritage, called the idea 'bizarre'.
Labour reaction, page 2
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