Governor-General Quentin Bryce says news that Prince William will wed his long-term girlfriend Kate Middleton next year has "warmed our nation's heart".

William, the second-in-line to the throne and eldest son of Prince Charles and the late Princess Diana, became engaged to Ms Middleton while on holiday in Kenya in October, Clarence House said in a statement.

"The wedding will take place in the spring or summer of 2011 in London. Further details about the wedding will be announced in due course," said the statement from the official residence of Charles and his sons.

The future Princess Catherine has been given Princess Diana's blue sapphire and diamond engagement ring and bookies are tipping an August wedding.

The ring's jewels danced in the light of photographers' flashbulbs in the state rooms at St James's Palace as the couple spoke about their engagement.

Prince William said he gave Ms Middleton the ring so the late Princess could be with them in spirit.

"As you may have recognised now, it's my mother's engagement ring, so of course it's very special to me," he said.

"It was my way of making sure my mother didn't miss out on today and the excitement of the fact that we are going to spend the rest of our lives together."

Princess Diana was a bashful royal bride at 19, never comfortable in the media glare, but at 28, Ms Middleton is seen as more self-assured, from a stable, middle class, and comparatively boring family.

Prince William says the two women should not be compared.

"It's about carving your own future," he said. "No-one is trying to fill my mother's shoes."

The pair got engaged during their October holiday at a wild game reserve in Kenya.

"It was very romantic and it was a very personal time," Ms Middleton said.

Prince William was pressed on why it took him so long.

"I didn't realise it was a race, otherwise I probably would have been a lot quicker. But also the timing is right now. We're both very, very happy," he said.

Ms Bryce issued a statement this morning calling the wedding "a unifying time of much joy and celebration,"

"I am sure that Australians look forward with anticipation and excitement to hearing of your wedding preparations as they unfold," she said.

"And, naturally, we will take immense pleasure in welcoming you both on the occasion of your first visit to Australia together some time in the future.

"Your Royal Highness, your announcement has warmed our nation's heart."

Prime Minister Julia Gillard says the couple have the nation's best wishes.

"The Prince is well known for his charity work and for his ongoing service in the British Royal Air Force," she said in a statement.

"Prince William left a strong impression on many Australians during his visit at the beginning of the year.

"Ms Middleton will no doubt strengthen this remarkable reputation and she has the nation's best wishes and support."

'Delighted'

William's father Prince Charles said he was delighted with the announcement.

"[I'm] obviously thrilled, thank you very much. Been practising for long enough," he said.

And there was a more contemporary reaction from his wife Camilla Parker Bowles.

"It's wicked, brilliant," she said.

William's brother Prince Harry was also "delighted" that his older brother had popped the question.

"It means I get a sister, which I have always wanted," Harry said in a brief statement.

A cabinet meeting held by British prime minister David Cameron was interrupted by a call from Buckingham Palace with the announcement.

"You know, I was passed a piece of paper and announced the news in the middle of a Cabinet meeting and a great cheer went up and a great banging of the table," he said.

"A great day for our country, a great day for the royal family and obviously a great day for Prince William and for Kate."

He said he had spoken to Prince William personally to pass on his congratulations.

"He was obviously extremely excited about the news and thrilled about what lies in store," he said.

"I just said the government stood ready, anything we could to help make sure that what I know will be a great day of national celebration will be a great success."

Ms Middleton's father said he and his wife, Carole, were pleased with their daughter's choice of future husband.

"We all think he's wonderful and we're extremely fond of him.

"They make a lovely couple, they're great fun to be with and we've had a lot of laughs together."

The nuptials were initially tipped for 2012, but that date would have overshadowed the Queen's Diamond Jubilee.

With Britain currently facing austere times and its worst peacetime budget deficit, Clarence House said the wedding plans would bear this in mind.

"The couple are mindful of the current economic situation and the wedding will absolutely reflect (their) wishes - it's very much their day," a spokesman said.

Mr Cameron said: "It's great to have a piece of unadulterated good news that everyone can celebrate."

Jules Knight went to university with the couple, and explains why they share such a strong bond.

"Like lots of good strong couples they had a friendship before they had a romance, and they were in the same hall together at St Andrews University," he said.

Mr Knight says the royal wedding will help to lift the spirits of a country struggling to recover from recession.

"There's been a pretty hard recession and things have been a bit depressing around here and the weather's got a bit colder, so good news is always welcome," he said.

"I think in the UK we do that whole pageantry well, we like a good show, and so we're all excited about the actual day itself."

Media spotlight

Speculation about the wedding reached fever pitch following the news earlier this month that Ms Middleton's parents had joined a private shooting party at Charles' private residence in Scotland.

The couple met in 2001 at St Andrews University in Scotland where they were both studying art history, and they lived together in a shared house. They broke up briefly in 2007 but got back together again.

The wedding will come 30 years after Charles and Diana married in what was billed at the time as a fairytale wedding. The couple divorced in 1996.

Diana died in a car crash in Paris in 1997 while being chased by paparazzi photographers, sending Britain into an intense period of national mourning.

Ms Middleton's parents are a former airline pilot and air stewardess - a fact reportedly mocked by some of Prince Williams' aristocratic friends - who went on to become self-made millionaires in the children's party business.

The princess-to-be has been working at the business, Party Pieces, after an initial foray into the working world in London caused her to be hounded by press photographers and caused her to threaten legal action.

The intense spotlight on the young woman drew comparisons to Diana.

Prince William is currently serving as a search and rescue pilot based on Anglesey in north-west Wales, after graduating in September following 18 months of training, although he still takes time out for royal engagements.

He flew into Afghanistan on Sunday for a surprise visit to honour Britain's war dead, attending a ceremony at Camp Bastion in Helmand province, the home of the estimated 9,500 British troops deployed in the country.

The Prince had already paid a secret visit to the country in 2008, visiting frontline troops in Kandahar, and his younger brother Harry served in Afghanistan for 10 weeks in 2008.

- ABC/wires