Australia said Tuesday it planned to make a donation to the Queen Elizabeth Diamond Jubilee Trust rather than buying the monarch a gift to mark her 60 years on the throne.
Prime Minister Julia Gillard made the comment as a row flared in Britain after a minister suggested taxpayers could pay for a new royal yacht to mark the occasion.
The extravagant idea was shot down by British leader David Cameron, although London said it would consider plans for a privately-funded ship.
Gillard said Buckingham Palace had indicated that the queen's preference was for donations to be made to the Queen Elizabeth Diamond Jubilee Trust, a charity that will make investments across the 54-nation Commonwealth.
"We are considering making a donation to her trust," Gillard said when asked what Australia planned.
"I actually stood with Prime Minister Cameron when he indicated that the advice from the palace was that the queen's preference was for a Diamond Jubilee Trust.
"Prime Minister Cameron certainly indicated that the UK government would be making a contribution to her trust," she added.
British Education Minister Michael Gove this week suggested the queen's "highly significant contribution" to the Commonwealth should be recognised with a yacht to replace Britannia, which was decomissioned in 1997.
The queen is warmly regarded in Australia, a former British colony, though from time to time debate flares about whether ties to the monarchy should be cut and the nation become a republic.
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