Video report by ITV News Royal Editor Chris Ship
The Royal Family have been left "deeply disappointed" by Harry and Meghan's decision to "step back" from duties, which left The Queen herself "blindsided".
The Sussexes had only just begun talks with the Queen and Charles about their future roles when they made their decision to go public.
But now it can be revealed that Harry and Meghan's rushed statement took royal households by complete surprise.
ITV News Royal Editor Chris Ship reports that The Queen, Price Charles and Prince Williams were all blindsided by the move.
Harry and Meghan had just begun talks with the Queen and Charles about their future roles when they made their decision to go public.
The head of state and her son were only recently informed of the Sussexes intention to explore their public positions as members of the monarchy, and were not aware the statement was due to be issued.
The couple's decision was announced on Wednesday evening when they said they will work to become financially independent while continuing to "fully support" the Queen and their patronages.
They added they will split their time between both the UK and North America, and that their decision comes after "many months of reflection and internal discussions".
But a spokesperson for the Palace said: "Discussions with The Duke and Duchess of Sussex are at an early stage.
"We understand their desire to take a different approach, but these are complicated issues that will take time to work through."
What happens next? ITV News Royal Editor Chris Ship explains the significance of the announcement
Speculation has been mounting for weeks over the couple's future, following their emotional appearance in an ITV documentary with Tom Bradby and an extended break in Canada.
They believe splitting their time between the UK and North America will "enable us to raise our son with an appreciation for the royal tradition into which he was born, while also providing our family with the space to focus on the next chapter, including the launch of our new charitable entity."
The Buckingham Palace statement said they would share "full details of this exciting next step in due course".
The couple thanked the public for their "continued support" in light of the decision.
Earlier this year, The Duke and Duchess of Sussex have left the Royal Foundation which William and Harry had set up for their charity work.
The couple split from the Royal Foundation created with Harry's brother, William, amid speculation of a rift growing between the pair.
Harry and Meghan have become increasingly private since the birth of their son, Archie. The duchess opted to have a birth private from the public gaze, unlike her sister-in-law, Kate.
Have the cracks in the royal bond been visible for a while? ITV News' Tom Bradby investigates
The couple's high-profile tour to Southern Africa, carried out at the request of the Government, was overshadowed on the penultimate day by a press complaint regarding privacy.
It was announced Meghan had begun a lawsuit against the Mail on Sunday over an alleged breach of copyright and privacy, after it published a letter between her and her estranged father. The paper said it would defend its case vigorously.
Two further tabloid papers were the focus of High Court action in relation to the interception of voicemail messages.
Has this happened before?
Harry and Meghan aren't the first royals to step away from the public spotlight.
Harry's great-great-uncle, the former King Edward VIII, famously abdicated in December 1936 to marry American divorcee Wallis Simpson.The royal met socialite Mrs Simpson when she was still married to her second husband Ernest in 1931 and they soon began an affair.
Harry's uncle the Duke of York announced last year he was withdrawing from public duties "for the foreseeable future" following his disastrous appearance on BBC's Newsnight to explain his friendship with convicted sex offender Jeffrey Epstein.
Andrew's ex-wife the Duchess of York was reportedly frozen out of the royal family when their marriage broke down.
Harry's mother Diana, Princess of Wales said in 1993 that she was reducing her official engagements and would live a more private life, following the announcement the previous year she and Charles were to separate amicably.
Diana was also stripped of her Her Royal Highness title after the divorce.