The bunch will also no longer formally represent The Queen.
The Duke and Duchess of Sussex intend to repay 2.4m of taxpayer money for the refurbishment of Frogmore Cottage, that will remain their UK family dwelling, the announcement added.
The new arrangement comes into effect in spring this year, the palace said.
The Queen said following”several months of conversations and more recent discussions” she was”pleased that together we have discovered a constructive and encouraging way forward for my grandson and his family”.
“I recognise the challenges they have experienced because of intense scrutiny over the last two years and encourage their wish for a more independent life.
“I want to thank them for all their dedicated work throughout this nation, the Commonwealth and beyond, and am particularly proud of how Meghan has so quickly become one of their household.
“It’s my whole family’s expectation that today’s arrangement allows them to start building a peaceful and happy new life”
Buckingham Palace said the royal couple knew they were required to step back from imperial duties, such as official army appointments.
The palace added that they would continue to keep their personal patronages and institutions.
“While they could no more formally represent the Queen, the Sussexes have made clear that what they do will continue to maintain the values of Her Majesty,” the statement added.
The hall said it wouldn’t comment on what safety arrangements are in place for the royal couple.
Their new site, sussexroyal.com, continues to be upgraded following the Queen’s announcement.
“In accord with the statement by Her Majesty The Queen, data on the roles and function of the Duke and Duchess of Sussex will be upgraded on this website in due course,” it stated.
The new post also invited visitors to the website to learn more about the site at the meantime to see the present works of”Their Royal Highnesses”.
Earlier this monththey said they wanted a”progressive new function” within the establishment, where they would be financially independent and divide their time between the united kingdom and North America.
Last yearthey both spoke about the difficulties of royal life and press attention.
The duke said he feared his wife could fall prey to “exactly the exact same powerful forces” which led to his mother’s death.
‘Harder to think of a far cleaner fracture’
But that is about it. No title, no royal obligations, no army appointments, no tours spent in Canada, no money.
The early conversation was of a much more combined life – one where perhaps Harry and Meghan continued with some royal duties, dividing their time evenly between the UK and Canada.
However, the contradictions and conflicts of interest were too many.
There are still lots of information to thrash out.
And the entire thing is going to be reviewed after a year.
But a new life awaits Harry and Meghan – actors, certainly, but a different kind of royalty.
BBC royal correspondent Nicholas Witchell said questions remain unanswered from the statement, including exactly what the couple’s tax and immigration status will likely be in the UK and Canada.
Our correspondent said royal officials had not given a definite answer about if Meghan nevertheless meant to gain British citizenship, which could involve her spending a specific amount of time in the UK.
“He is not likely to have the ability to turn off that worldwide fame. He still has a significant part to play within the institution, that is likely why those talks have dragged on a bit longer than anticipated,” he explained.
Royal expert Penny Junor said the new arrangement was”the greatest possible outcome and a result that will actually prevent tragedy”.
The movement was agreed by the Queen, Prince of Wales and Duke of Cambridge.
The duchess is from the Commonwealth country with child Archie, where the Sussexes spent six weeks over the festive period.
On Tuesday she visited a charity at Vancouver which campaigns for teenage girls living in poverty.
On Thursday, the Duke of Sussex hosted the Rugby League World Cup draw Buckingham Palace – his first public event since he and the Duchess of Sussex said they would step back from royal lifestyle.
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