The dispute comes against a background of concern about open government, erupting after it emerged, as predicted in the Independent last month, that Sir John Bourn, the Comptroller and Auditor General, who scrutinises Whitehall spending, has no statutory power to launch investigations into how the pounds 9.8m Civil List allocation is spent.
Under the Commons-approved agreement with Buckingham Palace two years ago, the Queen and other members of the Royal Family get an annual 7.5 per cent pay rise - well above the current inflation rate - until 2000. The agreement also returned royal finances to the system that prevailed before 1975, when soaring inflation forced an annual review.
The agreement was introduced by Margaret Thatcher, then Prime Minister, in a statement to MPs and approved by Mr Major, then Chancellor of the Exchequer. It went through Parliament on a negative resolution, prompting complaints yesterday that it was not adequately debated.
But while Terry Davis, a Labour member of the all-party public accounts committee, the Commons spending watchdog to whom Sir John submits his reports, predicted 'an almighty row', the Treasury insisted there was 'generally a warm welcome for Mrs Thatcher's statement from MPs'.
Mr Davis accused Mr Major of 'pulling the wool over the eyes of Parliament' and claimed Mrs Thatcher evaded questions about Parliamentary scrutiny.
Hansard records of Mrs Thatcher's statement show Neil Kinnock replying: 'There will be widespread support.'
David Nicholson, a Conservative member of the accounts committee, said: 'I am inclined to . . . ask whether all members of the Royal Family are well served by their advisers, particularly their media advisers.' But he emphasised: 'My initial view is that I am not sure how the PAC or indeed the National Audit Office (headed by Sir John) would go about an exercise like this.'