It's been called the greatest crisis for the monarchy since King Edward abdicated his throne to marry the American divorcee, Wallace Simpson.
And in a strange twist of fate, that momentous announcement happened on this very day back in 1936.
So what's the view from royal watchers like Simon McCoy in London?
So Simon, is this the end of the monarchy?
Well David, I think it's as near as they've been since the last abdication crisis of 1936.
I think only time will tell if we're into a crisis for the monarchy.
We've got to see, just wait and see what happens as far as public opinion is concerned.
The Princess of Wales is the most popular member of the royal family.
And if you're setting up a rival court to Prince Charles, there's one person he's going to be afraid is going to steal the limelight, and it is his wife.
I think they're all right as long as it's a plain separation. The problems will arise if it goes to a divorce.
Then I think the monarchy itself is in severe trouble.
The announcement does seem to be poorly timed with the announcement of Princess Anne's marriage only two days away.
It's appalling timing, and I'm sure the Prince of Wales would not have done it unless he felt that there was absolutely no other way out of this problem.
I think what we've seen over the last few months is the Prince of Wales himself getting more and more agitated and upset at what he's seen,
as a denigration not just of him as a father and a husband, but as him as a future king.
Do you think the announcement made today was to pre-empt another scandal?
No, I don't think there's any question of that, and Buckingham Palace has been quite clear that there was no third party involved in this.
And we at Sky News were fortunate tonight to get the only pictures of James Gilby.
We all remember him as the source of the squidgy tape with the Princess of Wales.
That conversation was the recording of that conversation led to quite a scandal earlier in the year.
And we've also seen tonight Camilla Parker Bowles, who interestingly had a police escort away from her home tonight.
So clearly she was forewarned of what was going to happen.
But I don't think we can talk of another scandal looming.
I think we've seen two people who've realised that the sham and the charade just cannot go on.
Do you think Charles will pursue his friendship with Camilla Parker Bowles?
Camilla Parker Bowles is married, let's not forget that, and her husband is very much on the scene.
And he has been saying that she's not having an affair with the Prince of Wales, that they are very close friends.
With what's happened, will Charles become King?
It all depends. I think if anything happened to the Queen in the next few years, then of course Prince Charles will become King.
And if they are still formally separated, there's no reason why the Princess of Wales shouldn't become Queen.
That's certainly Buckingham Palace's view.
But I think you've got to look at the longer term scenario, and that has to be that the Queen lives on,
and there's no reason why she shouldn't for at least 20, 30 more years.
And at that stage, Prince William, who's currently second line to the throne, would be ready to take over the reins.
And I see no reason why, if Prince Charles wanted to really get at his wife, he shouldn't say,
I don't want to become King, I'm going to hand over the reins to my son, Prince William, and he would become King William.
Do you think the children will suffer?
Well, I think both boys will suffer, and as much as any children suffer during a divorce,
well, during a separation at least, it's going to be a very difficult time for both of them.
They're going to come home on Sunday after their term at school, and they're going to find total chaos around them.
Can the Queen survive this?
The Queen will survive, yes.
As I said earlier, if anything happens to her in the next few years, the monarchy's plunged into crisis without any doubt,
because certainly the British public, and I suspect the public in the Commonwealth and worldwide,
will at the moment feel great sympathy for the Princess of Wales, she's by far the more popular figure.
And regardless of Prince Charles' calls for dignity and duty, to be put above all else,
the Princess of Wales is the number one royal as far as the public is concerned.
Now, if she goes off on her own, sets up her own court, in rival, if you like, a rival camp to Prince Charles,
then he is the ultimate loser, and the loser beyond that has got to be the monarchy.
If he doesn't work out as a king and people don't support him, then the monarchy is dead.
How seriously can the public take a separated king and queen?
Well, this is the problem. A lot of people regard this as absolutely crazy,
and there were gasps of amazement in the House of Commons when John Major said,
the Princess of Wales will still one day become Queen.
The question is, how on earth can that work? And the answer is, I don't see how that can work.
Particularly if they're going to go their separate ways, presumably sooner or later,
they will have respective boyfriends or girlfriends.
And the public will then have to decide whose side they're on in such a way that if they choose Diana,
Prince Charles has had it, basically.
Do you think Andrew Morton's book was perhaps the beginning of the end?
Yes, I do, and the reason for that is not because of what was in it,
but the fact that the Princess of Wales was indirectly contributing to its contents.
Prince Charles will never, ever forgive his wife for involving Andrew Morton
and getting her friends to tell Andrew Morton what her side of the story was.
What do you think the royal family will do?
Will they throw their weight behind Charles or cast Diana out, or what?
Well, David, that's an interesting question, and I think clearly that Buckingham Palace
and all the senior courtiers know what side their bread is butted on,
and they will side immediately with Prince Charles.
And what we will see in the next few weeks is her trying to set up a press office,
an information office, and an office of Buckingham Palace staff
that will in effect be acting in rivalry to her husband.
And I think those within the palace who know what will be going on in the next few weeks
will very quickly stand behind him and mark their colours to the Prince
rather than to the Princess.
So finally, Simon, can things get any worse?
It's difficult to see how.
There are two scenarios that we've all been realising are possible.
The Queen Mother is 92 years old.
This will come as a great shock to her.
It's this integration of a royal family,
which she was very much instrumental in setting up back in the 1930s with her husband.
It was she who introduced the cameras in and wanted this more informal approach to monarchy
to be its ultimate strength, and in many ways it's what has destroyed it in the past two years.
So obviously there are concerns for her health and how she will cope under the strain.
And the Queen herself will be absolutely dismayed as to what is happening.
As long as she is at the helm though, there is hope for the monarchy.
As long as she is in control and is seen as the figurehead, the monarchy will survive.
Any problems will come if for any reason she suddenly has to hand over to Prince Charles.
Then it's in trouble.
Simon, thanks very much.
Pleasure.
Of course it's sad when any marriage breaks up,
let alone one important enough to be debated in Parliament.
Much more coming up, so stay with us.
For all the mud that's been thrown around,
Diana remains by far the most popular of the younger royals.
Perhaps that was why Prime Minister John Major was so careful to point out
that she's still eligible to become Queen despite the separation.
To rule her out would have risked stirring up an even bigger storm in terms of public reaction.
It is announced from Buckingham Palace that with regret,
the Prince and Princess of Wales have decided to separate.
Their Royal Highnesses have no plans to divorce
and their constitutional positions are unaffected.
This decision has been reached amicably
and they will both continue to participate fully in the upbringing of their children.
I'm sure that the whole House will share the feeling of sadness
which she has expressed at the announcement of the separation
and will also share the hope that a greater degree of privacy
might result for the Prince and Princess of Wales and their children
in what would be a difficult time for any family.
It must be one of the saddest announcements made by any Prime Minister in modern times
and I'm sure the whole House feels exactly the same way about it.
This shattering announcement will result in changes in our constitution
and that it's high time that we stop this charade of swearing allegiance to the Queen
and her heirs and successors because we don't know from time to time who they are.
Madam Speaker, the Honourable Gentleman does not, I believe, speak for the nation or any significant part.
The affection for the monarchy and members of the royal family in this country is deep, is widespread and is enduring.
We live in a monarchy and if I may speak personally, I hope and believe we always will.
I think we've sort of arrived through it really.
I think it's sort of settled down given a few years and we'll be all back to normal again.
I just think it's very sad that any family splits up irrespective of the monarchy or not.
It might put pressure on the Queen but I think the Queen will continue and I don't think there will be any problem with that.
Whatever is best for the country, I know Prince Charles will do.
And with us now Diana Fisher and Colin Stanley Hill.
Diana, Colin, thanks for coming by.
A sad but not unexpected day. You were there in 81 when they tied the Royal Knot. What was it like?
July 29th was one of those gorgeous days. I can remember the words I said, a day made in heaven and crowned on earth.
Did you think it would last?
At the time, yes I actually did. I thought, I worried a little bit about the 12 years age difference
because I thought Charles is worldly wise and Diana is young and pretty and frivolous and has done nothing yet.
And there she was being married and as we know she had a baby within a year and it was like it was all heaped on her and she didn't have time to have fun.
Colin, is there any precedent for a King and a Queen leading separate lives?
Oh yes David. In fact almost exactly 200 years ago George IV when he was crowned had been separated legally from his wife Carolina Brunswick for 20 years.
And when he turned up for his coronation they literally slammed the door of the abbey in her face and she beat upon the door.
Very undignified.
Well we think that the monarchy is crumbling. Nothing compared with what's happened before.
But constitutionally if Charles and Di should divorce and he wants to remarry what happens then?
Well the British constitution is rather like a unicorn. Everybody knows what it looks like but no one's ever seen one.
Because there is no British constitution, not written like we have it in Australia.
And don't forget it all revolves around the Church of England and the Church of England was founded by Henry VIII who was of course divorced.
And so we have this situation at the moment where they say oh well if he's divorced he can't become King.
I mean it's a legal contradiction. Yes if he did divorce then there would be problems but it would not ultimately prevent him from becoming King.
But in fact he does not want to become King, does he Diana?
Well let's talk about the third person in the triangle here, his old flame, Camilla. What will happen there?
Well they've been old friends for a long long time and I think possibly you go back to people that you feel comfortable and happy with.
I think she was worldly wise and maybe if we look back he should have married her but she'd have to be divorced.
And then he would probably have to renounce the throne if he wanted to marry her.
Is there any passion there to rekindle? Can that happen?
Of course it could happen. Of course it could happen.
Now what about the kids? I mean I feel sorry for the kids in this because the pressures they're going to face I think will far outweigh what their adults are going to face.
Well curiously enough I spent most of January this year with Princess Michael of Kent at 10 Kensington Palace and that was when the first so-called holiday snaps of Diana hit the headlines.
And Princess Michael said you know it's bad enough for us but at least we're adults but she said the real victims are the children.
She said I have a 12 year old son and a 10 year old daughter at boarding school.
Immediately next door Prince William and Prince Harry are at their school and then the Gloucesters with all of their young children.
And they're at a time of their life when peer pressure is very very important.
And to see all of this garbage which has been sort of chucked up by the gossip press this year.
No wonder the Queen calls it you know the annus oribulus.
There have been two marital separations, one divorce and one remarriage.
And then her holiday weekend at Windsor burnt down to capital.
I think really she can't wait to get this year over and done with.
That's it and that's why the situation between the Prince and Princess of Wales has been announced.
Because Anne's getting remarried on Sunday and they're sort of saying well let's hope we'll lump it all together.
But nothing's changed David, nothing has changed.
It's all just come out of the open and Prince Charles is going to move in with his grandmother who incidentally is over the moon about it.
And it's just that the Royal Family are now being more open.
Well just quickly Diana.
I think that a lot has changed because I think the press now poke their noses into places where they're not meant to be.
And this has happened because of the change of the royalty coming down to be amongst people.
They couldn't answer back in days gone by.
Is this the beginning of the end of the monarchy?
I hope not.
No, no.
Thanks to you both for coming in.
Thank you.
Memories of happier days in a moment.