Extensive work, including construction of a new roof, will be carried out to the 17th century palace apartment for Prince William and his wife Catherine, the Duke and Duchess of Cambridge.
The total cost has yet to be be confirmed by the royal household but it will be published next week, the BBC reported.
A spokeswoman for Prince William and his wife Catherine said: "This is the duke and duchess's one and only official residence. It is here that they plan to stay for many, many years to come.
She added asbestos was removed and an overhaul of the electrics was carried out.
Prince William and Catherine's London apartment was designed by Sir Christopher Wren and was the home of Princess Margaret and Lord Snowdon.
The princess remained there after their divorce and lived there until her death in 2002.
The living space was last refurbished in 1963.
"We also had to take into account the fact that Kensington Palace is a scheduled ancient monument, and all elements of the refurbishment had to be agreed with English Heritage," the spokeswoman said.
"They were also at pains to ensure that the specification is not extravagant," she said.
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