Olympic silver medal winning equestrian Phillips, 32, and her rugby player husband Mike Tindall, 35, are expecting their first child in the New Year, Buckingham Palace announced here today.
Phillips, whose mother is Princess Anne - the Queen's second child after Prince Charles, is understood to be just over three months' pregnant.
"Mr and Mrs Mike Tindall are very pleased to announce that Zara Tindall is expecting a baby in the New Year... Members of both families are delighted with the news.
British Prime Minister David Cameron's spokesperson said it was "terrific news" that the couple were expecting a baby.
"The Prime Minister will send his very, very best wishes to the happy couple," he added.
The newest royal baby will become 16th in line to the throne and the fourth great-grandchild to the Queen and Duke of Edinburgh.
The others include Savannah and Isla Phillips, daughters of Zara's brother Peter, and the Duke and Duchess of Cambridge Kate Middleton's expected baby.
Her children will be titled Miss or Master Tindall.
She met her husband during England's Rugby World Cup-winning campaign in Australia in 2003 and they married at Canongate Kirk in Edinburgh in July 2011.
Phillips is a well-known competitive horse-rider and has won individual gold in three-day eventing at the World Equestrian Games in Germany in 2006.
The title helped her become BBC Sports Personality of the Year later that year, following in the footsteps of her mother, Princess Anne, who won the award in 1971.