LONDON, DEC 23: In a bid to modernize the monarchy, Queen Elizabeth II plans to move members of her family out of London's Kensington Palace and convert it into an art museum and a memorial to former Princess Diana, The Sunday Times reported.

The newspaper said the move is part of a restructuring that has been under urgent consideration since Diana's death in a Paris car crash. It quoted senior royal sources as saying that ``the Queen now accepts that the family has to be further slimmed down to reflect the demands of public opinion.''

Although a final decision has not been taken, the proposals are likely to be announced early next year, the newspaper said in early editions available on Saturday.

There was no immediate comment from Buckingham Palace.

The Sunday Times said the Queen, who has not yet informed family members of the plan, will herself pay for them to be rehoused and provide pension deals for household staff. It said the palace, which has been a royal home since it was bought by King William II in 1689, will be converted into a permanent memorial to Diana and a museum to house pictures from the Queen's royal collection.

The 7,000 pictures currently are scattered among royal palaces and residences and many have not been seen by the public. The museum would charge an entry fee and the money would be used to reduce the royal family's dependence on state funds for running other palaces. The Queen already has made concessions to critics who say that the monarchy is too lavish and out of step with the times.

Royals now living at the palace include the Queen's sister, Princess Margaret, and various cousins.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.