Report- U.S. officials wanted Diana's palace

LONDON -- British royal officials rejected a request from American diplomats to move the U.S. Embassy in London into Kensington Palace, the former home of Princess Diana, a newspaper reported today.

The Sunday Telegraph said American officials approached representatives of Queen Elizabeth II about using the palace because they considered the embassy's current location in Grosvenor Square, Mayfair, to be vulnerable to a terrorist attack.

Both sites are in central London but the palace, located in Kensington Gardens, is set well back from the street and can only be approached by a guarded cul-de-sac.

The Sunday Telegraph said James Lane, an administrative affairs official at the U.S. Embassy, approached Alan Reid, the Royal Treasurer and Keeper of the Privy Purse, earlier this month with the request.

The newspaper said it was considered seriously by royal officials but eventually rejected, largely because the palace is still home to royal tenants, including Princess Michael of Kent. The palace, which was built during the 17th century, consists of 70 apartments.

It also was home to Princess Margaret, the queen's sister, who died in February 2002. Buckingham Palace has announced plans to open Margaret's former apartment to the public as an education center and exhibition space for royal ceremonial dress.

U.S. officials in London could not be reached for comment, and calls to Buckingham Palace were not immediately returned.