Hundreds were looking forward to the lavish bash as it is the one time they can mingle with senior Royals.
But Her Majesty was determined to show solidarity with a nation struggling with hardship and called it off after consulting senior courtiers. One worker said: "It's the first time in memory the party's been cancelled. We're all devastated as it's a great night when everyone lets their hair down.
"The Royals mix freely with servants - it's normal to see the Queen dancing with a footman or Prince Philip waltzing with a maid.
"The champagne flows like water and you feel your hard work has been appreciated. This won't go down well."
Some 1,200 guests were due at the £50,000 party, scheduled for December 13.
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