The coin is the first of four official memorials recommended by the Diana, Princess of Wales Memorial Committee.

Diana memorials include a £5 coin and special children's nurses

A version of it will be legal tender across the UK and money raised from sales of collectors' versions of the coin will partly fund the other three memorials.

The chairman of the committee, Chancellor Gordon Brown, said: "The Diana Memorial Committee received over 10,000 suggestions from people in all walks of life.

"I know that many people want a fitting and lasting reminder of Diana, Princess of Wales.

"I am sure that this official commemorative coin will be treasured by the people of Great Britain."

The committee recommended the coin as a simple and tasteful memorial that would be welcomed by the public.

Heads you win: David Cornell portrait appears on one side

A portrait of Diana by David Cornell will appear on one side of the coin, while the image of the Queen that has appeared on all coins minted since January 1998 will be carried on the other side.

Three collectors' versions of the coin have been designed. The cheapest is a base metal version which comes in an illustrated presentation folder and is priced £9.95.

The silver version, of which 350,000 will be minted, costs £32.50 while a gold version, with just 7,500 made, goes on sale for £595.

They will also come with a presentation case, but they will not be available until April.

Heads you lose: Traditional image of the Queen is on the reverse

In addition, a Diana £5 coin struck to a lesser standard than the collectors' versions will enter general circulation at face value on 1 July - the anniversary of the princess's birthday.

The other three official memorials recommended by the committee are Diana nurses to care for sick children, a children's playground near the princess's Kensington Palace home and an achievement award for secondary school children.

There will also be a commemorative walk through London's parks.

The coin is the only memento to be sanctioned by the Queen, the government and Diana's family.

A contribution from the sale of the coins will go to funding memorials.