-Kate and William have chosen to name the baby after The Queen and William's late mother, the Princess of Wales
-Name announced by Kensington Palace two days after the princess's birth - she was born on Saturday morning
-Charlotte, which is French in origin, is feminine version of Charles, a nod to her grandfather, the Prince of Wales
-Diana's closest friend Rosa Monckton tweeted: 'Diana's spirit lives on in her sons, and now her name lives on in her granddaughter'
By STEPH c*ckROFT FOR MAILONLINE and REBECCA ENGLISH ROYAL CORRESPONDENT FOR THE DAILY MAIL
PUBLISHED: 14:02 GMT, 4 May 2015 | UPDATED: 20:35 GMT, 4 May 2015
The name of the Princess of Cambridge has finally been revealed to the world as Charlotte Elizabeth Diana.
In a touching tribute to William's beloved family, the little girl has been named in honour of her grandfather, her grandmother and her great-grandmother.
Announcing the name in a statement this afternoon after days of speculation, Kensington Palace said: '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.'
It is believed that Kate and William, who first showed their baby daughter to the world on Saturday morning outside the Lindo Wing at St Mary's Hospital in London, will travel to Norfolk tomorrow where the new princess is reportedly due to meet with The Queen for the first time.
After days of speculation, the name of the Princess of Cambridge has finally been revealed to the world as Charlotte Elizabeth Diana
A princess called Charlotte — a name that is French in origin — is a nod to her grandfather, the Prince of Wales, while Elizabeth and Diana are in tribute to William's 89-year-old grandmother (centre) and his late mother (right)
A royal source said they understood the couple (pictured on Saturday) simply liked the name – but admitted it was a 'happy coincidence' that both William's father and mother would live on in their granddaughter
Just moments after the name was announced, Diana's friend Rosa Monckton tweeted that William's mother 'lives on in her granddaughter'
Within minutes of the name being announced, Diana's closest friend Rosa Monckton had tweeted: 'Diana's spirit lives on in her sons, and now her name lives on in her granddaughter #CharlotteElizabethDiana'. Diana was the godmother of Mrs Monckton's daughter Domenica.
The Princess of Cambridge, who is now fourth in line to the throne, was born on Saturday, weighing 8lb 3oz. Kate and William, who returned home to Kensington Palace less than 12 hours later, had held off revealing the name until the baby had been visited by the princess's grandparents.
It was initially believed that the Cambridges would travel to see the Queen today, ahead of announcing the name, but it is believed the couple will now travel to their home in Anmer Hall tomorrow.
A princess called Charlotte — a name that is French in origin — will be seen as a nod to her grandfather, the Prince of Wales, while Elizabeth and Diana are an obvious mark of respect to William's 89-year-old grandmother and his late mother respectively.
Royal aides told MailOnline that the baby's second names were self-evident and would 'speak for themselves'. As for Charlotte, they pointed out that much had been written about it being the feminine form of Charles.
Another royal source said they understood the couple simply liked the name – but admitted it was a 'happy coincidence' that both William's father and mother would live on in their grand-daughter.
For William, naming his daughter after Charles will be seen as a clear public demonstration of his love for the prince.
William is protective of his father, defending him against criticism he has often faced and often speaking of his deep admiration for the amount of time the prince commits to his charitable work.
The Prince of Wales strove to protect William and Prince Harry following the death of their mother and backed them as they have worked to honour her memory through their charitable connections.
They, in turn, accepted and supported him when he married Camilla Parker Bowles, now the Duchess of Cornwall.
Charlotte is also the middle name of Kate's sister Pippa Middleton. In French, it means 'petite' and 'feminine' or 'free man'.
In royal history, George IV named his only child Charlotte, but she died in childbirth at 21. George III's wife was Queen Charlotte, who was born 1744 and founded Kew Gardens. She used it instead of her given first name, Sophie.
Like most royals, the princess has more than one middle name, both of which are likely to have been inspired by two highly significant women in William's life.
It is customary for royals to look to their past for name ideas, the repetition in each generation an effort to preserve the continuity of one of the world's oldest institutions. With that in mind, the Duke and Duchess of Cambridge are likely to have chosen Elizabeth in tribute to the reigning Queen.
Her Majesty is held in great respect by her family and William has spoken of how she has become an even more important part of his life as he has grown older, while Kate, for her part, has forged a strong bond with the monarch since becoming a royal.
Other royals to have the name include the Queen Mother and the Duchess of Cambridge herself, who has it as her middle name. It is also Carole Middleton's middle name.
Many thought it likely that William and Kate would use the name Diana, as a mark of respect to his mother, who always craved a daughter. The Duke places great importance on honouring her memory, having already used Diana's sapphire and diamond engagement ring when he proposed to Kate.
But the name is likely to have been selected as one of the baby's middle names to avoid comparisons with her late grandmother.
After the name was announced, historians said the selection was 'nicely-balanced compliment'.
Historian Dr Judith Rowbotham of the University of Plymouth said: 'None of the Charlottes in the history of the British royal family have been lacking in character and personality, so one hopes that this one lives up to that name. Charlotte is also a compliment to Prince Charles, because it is the feminine of Charles.
'By using both Charlotte and Diana, Prince William is paying tribute to both his parents. And you have got a tribute to his much-loved grandmother Elizabeth, and indeed great-grandmother Queen Elizabeth (The Queen Mother). It is a nicely balanced compliment.'
Royal writer Christopher Warwick said there was an 'inevitability' that Diana would be one of the baby's names.
He said: 'I don't think we would have wanted a Princess Diana, but I am not remotely surprised that Diana is one of the child's names - I would have been surprised had it not been.'
Royal historian Hugo Vickers said the choice of Charlotte seemed to be based on taste rather than history, as the name has not been used by the royal family for a long time.
But he added that there would have been 'disappointment and surprise' if Elizabeth and Diana had not been included.
He said: 'Queen Elizabeth will become on September 9 the longest reigning British monarch and obviously she is the great matriarch of the family, highly respected by Prince William and no doubt by Catherine too. So I think we would have been very disappointed if that name hadn't been there and I'm sure it was always their intention to include it.
'And we know that Prince William likes to include Diana in many things, for example giving Kate his mother's engagement ring, so it would have been surprising if that had not been there.'
William's Uncle Earl Spencer, whose daughter is called Charlotte Diana, tweeted his approval of the names chosen by the Cambridges for their daughter.
His said: '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!'
The newest royal will be known as Princess Charlotte of Cambridge. The Queen brought in a rule change brought when the Duchess was pregnant with Prince George. Before this, the new princess would have been given the title Lady Charlotte Mountbatten-Windsor
Meanwhile, the betting industry is estimated to have paid out an astonishing £1million to punters who guessed the name Charlotte, according to Ladbrokes.
Odds had crashed to 3/1 as thousands of bets were put on the name in the past 48 hours. Those who picked Charlotte as the name when it was first confirmed that Kate Middleton was pregnant have been rewarded with a payout at odds of 25/1.
Spokeswoman Jessica Bridge said: 'Charlotte was the hot tip over the weekend and royal watchers up and down the land are quids in.
'We may have lost a fortune but we're paying out with a smile and wish the Duke and Duchess all the best.'
But 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 £100,000 in the name market.
For weeks, bookmakers had been saying that Alice was the clear favorite. But, the wait over the princess's name led to a betting bonanza. Charlotte and Alice were both competing to be favourite, while outsiders such as Olivia also attracted a sudden flurry of wagers.
A spokesman for Ladbrokes said the betting markets had been in 'total mayhem' with 20,000 individual wagers - some of which were six-figure sums - placed on the bet in the past two days. That equates to more bets than were put on the General Election.
Bookmakers had been 'praying' that the Duke and Duchess of Cornwall opt for a name outside of the top seven - which also included Diana, Alexandra, Victoria and Elizabeth - to stop them having to pay out millions in winnings.
If the baby had been called Diana as a first name - which had odds of 10/1 - the UK booking industry would have had to have paid out £1 million to winning punters.
After the name was announced, Tessy Ojo, CEO of The Diana Awards charity, said: 'It is wonderful news announced today that the new Princess carries the name of her Grandmother Diana.
'The Diana Award is the only charity set up in the late Princess' memory. We know that thousands of young people, from across the world, follow in her footsteps and carry this award set up in her memory with pride.
'Both Princess Diana's sons have said how special this award is which encapsulates the late Princess' innate qualities of human compassion and drive to improve the lives of others. It is lovely to know that her legacy lives on through Princess Charlotte Elizabeth Diana.'
When the baby's older brother, Prince George, was born in 2013, the royal couple took two days to reveal his name, waiting until after Queen Elizabeth II had met her new great-grandson.
Meanwhile, back at Kensington Palace, Kate's mother Carole and her sister Pippa were first to have a cuddle with the little princess. They drove through the gates of Kensington Palace at 11.31am yesterday and did not leave until after 6pm.
Charles drove himself down from Highgrove, his private residence in Gloucestershire, with his wife, the Duchess of Cornwall, to meet the granddaughter he had so desperately wanted.
The couple arrived, smiling and waving, at William and Kate's residence, Apartment 1A, at 12.46pm and stayed for an hour and a half. Charles has openly spoken of his hope that his son and daughter-in-law would produce a granddaughter, saying last year: 'I hope it will be a girl this time.'
Kate's father arrived at 1.38pm and stayed for three hours. There was no sign of the duchess's brother, James.
There was also a visit from Kate's midwife, Professor Jacqueline Dunkley-Bent, who was keen to check on mother and baby.
And in a touching display of affection, Prince Harry has said he 'can't wait' to meet his newborn baby niece.
Continuing his month-long secondment in Australia, the 30-year-old said his brother's second child is 'absolutely beautiful'.
He was informed of the baby's safe delivery before a public announcement was made in the UK and abroad on the Kensington Palace Twitter account.
The Princess was born at 8.34am London time, which was 5.34pm in Perth where her uncle was eagerly awaiting the news.
Although the Prince had hoped to be in England to greet his newest family member, duty called and he returned to Australia on Monday to resume his four-week placement with the Australian Defence Force.
William and Kate remained behind closed doors yesterday but were keen to pass on their thanks for the thousands of messages of goodwill they have received.
A Kensington Palace spokesman said in a statement: 'The duke and duchess are hugely grateful for the messages of congratulations they have received from people all over the world. It means a great deal to them that so many people have celebrated the arrival of their new daughter.
'Their royal highnesses were today visited by the Prince of Wales, the Duchess of Cornwall, Mr and Mrs Middleton, and Pippa Middleton.'
William and Kate have made clear that the hospital photo opportunity will be their daughter's last appearance for some time.
The couple are fiercely protective of their children's privacy and it is likely – apart from the possibility of a family portrait being released in the coming weeks – to be the last time the princess will be seen in public until her christening in three or four months. Even then, that is unlikely to be a public event, with only a handful of photographs released to the media.
One of the reasons that William and Kate have chosen to bring up their children at Anmer Hall in Norfolk is that its extensive private grounds mean visitors can escape the public eye. The ten-bedroom property is on the Queen's Sandringham estate.
This afternoon, as the world waited for the announcement of the princess's name, royal gun salutes were fired out this afternoon across London in honour of the new princess.
Soldiers on horseback rode out in procession through the capital, before dozens of deafening volleys were fired simultaneously from Hyde Park and the Tower of London.
As Big Ben to chime at 2pm, 41 volleys rang out across the park fired by the King's Troop Royal Horse Artillery. At the Tower there was a 62-gun salute fired by the Honourable Artillery Company (HAC), with an extra 21 volleys for the City of London.
Just before the King's Troop began the Royal Artillery Band played the Stevie Wonder hit Isn't She Lovely, a song he wrote to celebrates the birth of his daughter, Aisha.
The bells of Westminster Abbey also rang out at exactly 2pm to mark the royal birth.
The royal birth had already been greeted with an explosion of pink, as Tower Bridge and other London landmarks were bathed in magenta light. William and Kate have not yet announced the baby's name.
Kate was admitted to the Lindo Wing at St Mary's Hospital at 6am on Saturday morning, giving birth two-and-a-half hours later. When news of the baby's birth was announced, chants of 'Princess! Princess!' could be heard outside the Lindo Wing.
At around 12.30 a framed certificate signed by Kate's medical team was placed on an easel outside Buckingham Palace with the same words.
At around 4pm William left the hospital to collect Prince George and returned minutes later.
After being lifted out of the car and put on the ground to walk, George stretched out his arms to be lifted back up by his father before offering a timid wave to the gathered media and fans.
Cheers erupted for the young prince, who has not made a public appearance in the UK since his own birth in 2013, as he made his way towards the Lindo Wing in his father's arms.
After walking a few steps holding his father's hand, the one-year-old stretched out his arms to be picked back up by his father before being encouraged to wave to the gathered crowds.
Beaming with pride, William was seen mouthing 'good boy' in his son's ear before giving him a tender kiss on the head.
The pair then disappeared behind the hospital doors to reunite with Kate and the new princess in a scene reminiscent of Prince Harry's birth in 1984 when William toddled up the Lindo Wing steps holding the hand of his father Prince Charles.
When the Duke and Duchess presented their daughter for the first time on Saturday evening, cheers erupted outside the Lindo Wing.
Kate wore a Jenny Packham buttercup-print shift dress that the designer, one of the Duchess's favourites, says was made especially for her, teamed with a pair of nude Jimmy Choos, as she had done when George was born.
After they had returned home a statement on the Kensington Palace Twitter account posted a message from the proud new parents.
'Their Royal Highnesses would like to thank all staff at the hospital for the care and treatment they have all received,' it said.
'They would also like to thank everyone for their warm wishes.'
The baby girl, who arrived around one week late, is three pounds lighter than her big brother was when he was born.
William and Kate's new daughter, a younger sister for Prince George, who was born at the same hospital in July 2013, is fourth in line to the throne.
Although she is unlikely to ever become queen, it is not unheard of for a second child in the direct line of succession to accede to the throne.
Mostly recently the Queen's own father, King George VI, replaced his elder brother, King Edward VIII, who abdicated over his love for the 'unsuitable' American divorcee Wallis Simpson.
Thanks to a recent change in the law, the couple's daughter cannot be superseded in her claim to the throne by any younger brother who may yet come along.
The Succession to the Crown Act, passed in 2013, means that male heirs no longer precede their elder sisters in the line of succession
A 2012 intervention by the Queen also means that the new baby will automatically become an HRH – Her Royal Highness – and be permitted to take the title of princess.
As the second child of the second heir to the throne she would, until then, only have been a Lady.
Her arrival will shunt her uncle, Prince Harry, down to fifth in the order of succession. Her great uncle, Prince Andrew, will fall out of the top five for the first time to sixth.
Many royal watchers had been desperately hoping for a girl – the last to be born in the direct line of succession was Princess Anne back in 1950.
Meanwhile, retailers are already cashing in on the princess's birth, which experts believe will bring some immediate £80m into the economy, as people splash out on celebratory food and drink.
They also predict that the baby could be worth £1billion by the time she is seven, based on her bringing in a staggering £150m per year into the British economy.
Her older brother Prince George, who has already been declared 'the Prince of Sales', brought £247m into the country after his birth.
But experts predict the little girl will have a greater impact on the economy, because of the influence she is likely to have on the fashion world.
The same has been seen with the likes of Harper Beckham and Beyonce's daughter Blue Ivy Carter, whose outfits are carefully analysed around the globe.
Professor Joshua Bamfield, director of the Centre for Retail Research, believes that the baby girl could bring up to £150m into the economy and would be able to set trends throughout her life.
First off the mark to cash in from the birth is the Royal Collection Trust which has unveiled its new range of royal baby memorabilia.
Products available include a £19.95 coffee mug, a £39 tankard and a £14.95 cradle Christmas decoration made from white velvet and embroidered with pearl beads.
There are also decorations in the shape of a lion rampant and a toy rocking horse also on offer.
Meanwhile, the Royal Mint is marking the birth with a £5 coin designed by John Bergdahl, who was also behind the Prince George Christening coin, and many hotels are serving baby-themed afternoon teas.
For £45, the Palm Court in London offers pannacotta 'milk in a bottle', apricot cakes shaped like ABC learning blocks and a polenta pram.
As with her older brother, everything from the new princess's outfits to her baby blanket are expected to sell out.