This is something that I had been waiting for over 50 years

Crown Prince Alexander

The royals will be allowed to live in two palaces - the Old Palace and the White Palace, which was used as a residence by former President Slobodan Milosevic.

Prince Alexander, who has been living in Serbia since the current government restored his citizenship in March, is due next week to receive the keys to the two palaces located in an expensive Belgrade suburb, according to reports.

His father, King Petar II, once lived in the Old Palace. He was exiled in 1941 and died in the USA in 1970.

Regret

Earlier this week, Belgrade-based Radio B-92 reported that Serbian Prime Minister Zoran Djindjic had held talks with the crown prince and had "reached agreement for the Karadjordjevic family to return and live in their home".

The Old Palace is one of two palaces the Yugoslav royals will move back to

Mr Djindjic said the family could "also start proceedings for the return of its property", although it was unclear exactly how much property would be involved.

At the time, the prince said he did not want to stay in a hotel.

"I have a house here in our country. I am a Yugoslav, a Serb. This is my country, as much as it is yours," he said at the time.

"My wife and I are very happy to come here once again, but we do not want to come here as if we were arriving in a foreign country. We would like to come to our home."