The Prince of Wales's office has denied misleading police investigating theft accusations against two royal butlers.

The Royal Family has been accused of not making clear to officers that "gifting" unwanted presents to servants - who may later sell them - was common practice.

Sir Michael Peat, who is leading the internal St James's Palace inquiry into the alleged sale of royal gifts, said police had known all along that it was part of the culture of the palace.

How the police could ever say they did not know staff were given valuable presents is difficult to understand Sir Michael Peat

"It was totally clear to everybody that the Prince and Princess of Wales gave gifts, and valuable gifts, to staff," he said.

The criticism follows the collapse of the case against butler Harold Brown, who was accused of stealing valuables from the estate of Diana, Princess of Wales and selling them.

A month previously, the theft trial of Diana's former butler Paul Burrell collapsed when the Queen remembered he had told her he was keeping certain items.

Tony Blair entered the row on Wednesday, telling MPs that "the Crown Prosecution Service are learning the lessons of both cases - and I hope they learn them quickly".

Sir Michael said police had known all along that "vast treasures" had been given to Mr Burrell.

"They did not charge Paul Burrell with stealing a large number of items... such as dresses, paintings by the Prince of Wales, items from the Royal Collection and china," he said.

"They accepted that those items had been given by the prince or the princess, so how the police could ever say they did not know or accepted that staff were given valuable presents is difficult to understand."

He said he had spoken to the Director of Public Prosecutions and Metropolitan Police Commissioner Sir John Stevens on Wednesday morning.

Sir Michael: "Vast treasures" were given away

Both assured him St James's Palace had neither hindered nor misled officers, he said.

Any suggestion to the contrary "came from the Police Federation", Sir Michael said.

"The Prince of Wales saw the police and made himself available to answer any questions.

"We have answered every single question that the police raised."

The internal palace inquiry was set up after the Burrell trial and was cited by the prosecution in the Brown trial in its failed attempt to get a postponement.

Royals 'rattled'

But Sir Michael defended the inquiry's timing, insisting: "We were aware that there might be some effect on the Brown trial and I took legal advice on this matter and we were very happy to delay publishing the results of the inquiry until after the Brown trial, if anyone felt that it might compromise the trial."

BBC royal correspondent Peter Hunt said the Royal Family had obviously been "rattled" by widespread criticism in the press.

"Clearly they have decided the best strategy is to come out fighting and tackle the acres of newsprint we have, with suggestions that the princes weren't upfront about the whole culture of giving gifts," he said.

Earlier, Labour MP Vera Baird told the BBC the conduct of the Royal Family "really needs to be investigated".