A statement issued by the palace at 1200 said they were to part on "terms agreed between them".

There were no plans for divorce, the statement continued.

The Queen who has been kept informed of developments is said to have been "saddened" by the decision but understanding.

The couple have been married for nearly 16 years but there has been speculation over the state of their marriage for some time.

In recent years they have spent much of their time apart.

The decision to separate is said to have been made before the furore surrounding the theft of letters to the princess from the Queen's equerry, Commander Timothy Laurence.

Commander Laurence was today making no comment at his home in Winchester, Hampshire, in the south of England.

Princess Anne, 39, is currently in Puerto Rico in the Caribbean attending the annual meeting of the International Olympic Committee.

On her return to Britain, the princess will remain at Gatcombe Park, the marital home in Gloucestershire with children, Peter and Zara.

Captain Phillips will have full access to the children and continue to manage the estate at Gatcombe Park - a gift to the couple from the Queen.

He will also continue to have his stables there and run the successful horse trials staged on the estate.

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