French magazine Closer plans to publish what it claims are topless images of Kate, Duchess of Cambridge, snapped on the terrace of a guest house during a brief holiday she enjoyed with William in France last week.
The Duke and Duchess of Cambridge earlier today were said to be "saddenned" by the claims..
However, Sky News has reported that William and Kate have now seen the photographs and are "furious and incredulous" they have been published.
They are believed to be consulting Briish and French lawyers and considering their options.
The royal couple broke new ground by touring a mosque for the first time during their tour of Malaysia, but all media attention was on speculation that another member of the Royal Family will be at the centre of embarrassing images.
The couple were staying in Provence at a chateau owned by Lord Linley, the Queen's nephew, ahead of their Diamond Jubilee tour of south-east Asia and the South Pacific on behalf of the Queen.
St James's Palace declined to comment on the claims made by the publication, but royal officials said that if the photos are genuine and are published, it would be like "turning the clock back 15 years", according to reports.
The magazine's French website showed an image of its new front cover with a heavily pixellated image of a woman with dark hair, it claims is the Duchess, in a bikini apparently about to remove her top.
William and Kate were told about the allegations this morning before they visited they Assyakirin Mosque and had also looked at the images on the website.
Speaking about the royal couple a source said: "They're saddened their privacy has been breached - if it has been breached."
The source stressed it could not confirm if the pictures were of Kate as they appeared to have been taken with a long lens and were pixellated.
The source added: "We will talk to our lawyers in London and counterparts in Paris to see what options are available."
He went on to say: "We're not aware of anyone (in the UK) seeking to publish so the Press Complaints Commission is not coming into it."
If the topless pictures are genuine, it would reignite the row over privacy which raged around Prince Harry last month, when embarrassing images emerged of him frolicking naked in a Las Vegas hotel.
Staying in a reported £5,000-a-night hotel suite, Harry was filmed wearing a hat, sunglasses and colourful swimming shorts, and socialising with bikini-clad women at a pool party.
The Sun was the only British newspaper to defy a Press Complaints Commission advisory note not to publish photos of Harry in the nude with an unnamed woman.
In another development there was a security scare when a man believed to be an avid royal fan tried to approach the royals' chauffeur-driven limousine apparently with the aim of handing the Duchess a flower or taking a photograph but was detained by local police.
The Duke and Duchess arrived in Singapore on Tuesday and are currently in Malaysia before travelling on to Borneo then the South Pacific.
Malaysia is a largely Muslim country with laws on public decency which makes the timing even more difficult.
Today the royal couple will experience the full diversity of Malaysian life when an outdoor extravaganza is staged in their honour.
They will enjoy a cultural fair of music and dance, in the capital Kuala Lumpur, reflecting all aspects of the Commonwealth country's heritage.
Later, at a lunch given by the British Malaysian Chamber of Commerce, trade links between the two nations will be highlighted by the Duke when he gives a speech to the assembled businessmen and women.
He is expected to underline the importance of the relationship both for British and Malaysian prosperity and for cultural ties between the two nations.
During the day, William and Kate will also enjoy a Diamond Jubilee tea party hosted by Simon Featherstone, the British High Commissioner to Malaysia, and his wife Gail at their residence.
At the end of the day, the royal couple will leave mainland Malaysia and fly to Kota Kinabalu, capital of the state of Sabah on Borneo, from which they will travel into the rainforest jungle tomorrow to explore the habitat.