At least four senior staff members at Buckingham Palace have reportedly been made redundant as part of cost-cutting measures.
The Daily Mail said servants who had lost their jobs, some with young children, also faced losing their homes at the Royal Household, although a Palace spokeswoman denied the claim.
One source told the newspaper staff morale was at "rock-bottom - the worst I have ever known".
The newspaper also said Palace porters had their overtime stopped as part of the widespread cuts.
A Buckingham Palace spokeswoman said costs were constantly reviewed and in "rare instances" staff were made redundant, but strongly denied claims of low morale.
As a public institution, scrutinised by Parliament, the Royal Household constantly reviews structures and staffing to ensure that it is run in the most effective and efficient way possible.
In rare instances this can involve redundancies; those affected are routinely offered a severance package and support, including retraining.
Internal surveys consistently show that employees are proud to work for the Royal Household and represent the Queen. Morale at Buckingham Palace continues to be high, with low staff turnover.
The earliest surviving portrait of a gardener will form part of a new 150-work display at the Queen's Gallery from next week.Read the full story ›
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Investigators have been searching the home of a Royal Protection officer and a police building in the grounds of Buckingham Palace where ammunition was found.
Today's arrest came about as a result of an internal investigation by the Metropolitan Police.
The investigation, by the Directorate of Professional Standards, commenced a few weeks ago following the reporting by officers from Royalty Protection of ammunition found in their personal lockers or belongings.
Assistant Commissioner Mark Rowley said a reorganisation of the force's Protection Command had "revealed a few pockets of poor behaviour".
Metropolitan Police have said that the ammunition was found in personal lockers in a dedicated police building in the grounds of Buckingham Palace.
The officer arrested in connection with ammunition found in a locker area of Buckingham Palace was not assigned to guard any individual member of the Royal Family, police said.
The arrested officer is being questioned on suspicion of misconduct in public office and unlawful possession of ammunition.
He is in custody at a London police station and will be suspended from duty.
A Royal Protection officer has been arrested following the discovery of ammunition in personal lockers in the grounds of Buckingham Palace.
Metropolitan Police, who announced the arrest, believe the ammunition came from its own supplies.
A Queen's Guard pointed his bayonet-fixed rifle at a member of the public outside the gates of Buckingham Palace when an argument erupted with a police officer, The Sun on Sunday reported.
The soldier left his post to intervene when the man refused to stop shouting at the officer outside the palace gates on Friday, the paper reported, with a photograph showing the guard pointing his rifle towards the man's face.
A Metropolitan Police spokesman said: "Police were made aware of a disturbance at the North-Centre Gate of Buckingham Palace at approximately 5.50pm on Friday, April 4.
"Officers from Royalty Protection spoke to a man and he was given words of advice and there were no arrests."
The Queen's Guard is not believed to be facing any action over the incident.
An Army spokesman said: "We are aware of an incident outside Buckingham Palace on Friday and while no one came to any harm and there were no arrests, we are very clear that the Metropolitan Police lead on Royal Security arrangements including outside the Palace itself."
Buckingham Palace declined to comment.
Prince William wants all ivory in the Royal Collection at Buckingham Palace to be destroyed, according to a leading primatologist.
Leading primatologist Jane Goodall told the Independent on Sunday that the Duke of Cambridge had told her he would "like to see all the ivory owned by Buckingham Palace destroyed".
Prince Charles has reportedly also asked for all ivory items at his Clarence House and Highgrove homes to be removed during the last few years.
Charles and William called on the world to turn its back on illegally traded animal parts like ivory and rhino horn in a video appeal earlier this month.
Illegal trade in animal parts such as rhino horn, tiger parts and elephant tusks is worth more than an estimated £11.5 billion each year.
Creations by Tracey Emin and Grayson Perry will appear among more than 100 contemporary artworks to go on show at Buckingham Palace.
The exhibition will mark the Queen's Diamond jubilee last year, and also features works from David Hockney and Anish Kapoor.
The works were loaned by the Royal Academy and include creations from some of its most high-profile artists.
Mr Hockney's work is a colourful image of the Queen's initials from her cypher "EIIR" created on an iPad, while Emin submitted a monoprint portrait of the monarch titled HRH Royal Britannia.