is about to be replaced because of her age.

Commander Nick Wright said no decision has been made to replace the 40-year-old Britannia with a new $115-million vessel, as reported on Friday in London's Daily Mirror.

"Buckingham Palace and anything else is getting on in age, but you don't say: `Buckingham Palace is 300 years old; we'd better replace it,''' Commander Wright said.

The Royal Yacht arrived in Hamilton on Thursday and sailed for Mexico on Saturday.

Commander Wright, who is secretary to the Britannia 's Commanding Officer, Rear Admiral Robert Woodard, said: "There's actually a lot of life in this Royal Yacht.

"Unlike a warship, it doesn't need weapon updates all the time. It just needs a bit of care and maintenance expenditure...and you can do that quite cheaply.'' When salaries of the 250 crew members were considered, Commander Wright agreed the cost of running the Britannia could hit $15.9 million a year.

But through "trade days'' when foreign businessmen are courted aboard the ship, "I would say that it takes in more than that in business,'' he said.

Most visitors are "gob-smacked'' when they come aboard.

The British Government also denied the report, and Buckingham Palace said it was too early to say what a Government review of Britannia would determine.

The government announced the review of Britannia after a $24.50 million refit last year.

The left-leaning Daily Mirror said the Queen was in negotiations with Prime Minister John Major on a replacement for the 5,700-tonne Britannia , which she used for 27 days last year.

It said Mr. Major accepted the new ship, which like the Britannia would be used occasionally for trade promotion duty, was "a necessity, not a luxury''.

Britannia is paid for out of the defence budget, partly because it could be used as a hospital ship in time of war. But it was unsuited to duty in the 1982 Falklands conflict with Argentina and in the 1991-92 Gulf War.

But the British government acknowledged for the first time that it would never be used for that purpose, prompting complaints from Opposition Labour Party politicians that the country could not go on paying for the Queen's ship.

The review of the Britannia follows a year of crisis for the Royal Family over its troubled marriages and lifestyle including uproar over government promises to pay for repairs to the Queen's home at Windsor Castle, badly damaged by fire last year.

Newspaper columnists have made much of plans by the Queen's husband Prince Philip to use the ship for a voyage in the Caribbean and to Florida next month.