Kate understands why Prince William doesn't want Pippa Middleton to move into their Kensington Palace cottage

The Prince not keen on having his sister-in-law live with him and Kate

Kate Middleton would like her sister Pippa to move in

Now says

Karl Lagerfeld calls Pippa Middleton ugly – has he looked in the mirror?

Kate Middleton's relationship with sister Pippa came under strain in April when Pippa, 28, hit the headlines for all the wrong reasons.

She embarrassed Kate, 30, by attending a fancy dress party in Paris where a stripper jumped out of a cake to God Save The Queen.

Then the next day she was caught smirking as friend Romain Rabillard apparently pointed a gun at paparazzi.

But the sisters called a truce three weeks ago on the advice of Wills and Prince Harry.

Pippa - who's just reunited with banker ex Alex Loudon - agreed to follow a set of rules laid down by Buckingham Palace to curb her partying.

But when Kate suggested moving Pippa into Nottingham Cottage, her and Wills' two-bedroom home in the grounds of Kensington Palace, Prince William, 30, put his foot down.

Our source says: 'Kate was disappointed, but she understood what Wills was saying.'

Read more on Kate Middleton's relationship with sister Pippa in Now magazine dated 30 July 2012 - out now!