BRITAIN'S royal family is to demand a pay rise from the taxpayer to fill a looming £40 million ($82 million) hole in its finances.

The Queen wants an extra £4 million a year to pay for repairs and improvements to her homes, including Buckingham Palace, Windsor Castle and St James's Palace. Courtiers may also request an increase in civil list payments to cover rising costs of running the royal family, which hit £41.5 million during the 2008-09 financial year - an increase of £1.5 million.

"Now is not a good time to be asking for more money," said Richard Bacon, an MP who sits on the House of Commons public accounts committee, which reviewed palace finances last month.

Republic, the campaign for an elected head of state, said the real cost of the monarchy worked out at more than four times the amount quoted in Monday's accounts, once the hidden cost of security, which some estimates put at £100 million a year, and other costs are included.