The cost of keeping the monarchy fell by £1.8m last year, Buckingham Palace accounts have shown.
The Queen's official expenditure for 2010/11 was £32.1m - down 5.3% from £33.9m last year.
For the first time, the cost was calculated under the new sovereign grant system.
"The Queen is very keen that the Royal Household should continue to reduce its expenditure in line with public expenditure reductions," said Sir Alan Reid, keeper of the privy purse.
"The decrease in expenditure is due mainly to increased income generation, the deferral of property maintenance expenditure and the implementation of a pay freeze.
"This pay freeze will continue on to this year."
However, republican groups dismissed Buckingham Palace's comments as "cheap spin".
The Republic campaign group spokesperson Graham Smith said: "Our report released 10 days ago shows clearly that the real cost of the monarchy is over £200m each year.
"That's enough to feed an army, to pay for thousands of nurses, teachers or police officers every year.
"With Prince Charles continuing to have an influence on government and with government agreeing a lucrative new funding deal for the palace, some proper scrutiny and honesty is well overdue.
"The monarchy is hugely expensive, it wastes taxpayers' money every week, it is not properly accountable and it continues to demand more.
"This is not an issue that can be swept to one side by cheap spin and headlines."
The Monarchy surrenders the revenue from the Crown Estates in return for public funding.
The most recent figures show the Crown Estate income surrendered £210m in the year to March 31, 2010.
The 2010-11 Royal Public Finances were calculated using the sovereign grant system - a single grant determined annually that will replace the current civil list from 2013.
Under the previous system, the civil list was agreed for a 10-year period and there were three different grants-in-aid providing funding for specific expenditure on royal palaces, communications and transport for official business.
Palace sources are understood to be pleased with the new reforms because they give the household more flexibility in determining how to allocate funding.
The total figures for the Queen's official expenditure do not include the Duke of Edinburgh's parliamentary annuity or the expenditure met directly by Government departments and the Crown Estate.


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