Downing Street has denied claims that plans to change the Crown Prosecution Service's name are a snub to the Queen.
Mr Blunkett said the renaming was suggested by the head of the CPS
On Tuesday Home Secretary David Blunkett said it could be renamed the Public Prosecution Service, to help people feel it is on their side.
Reports suggest the Queen was only told just before the reforms were unveiled.
No 10 pointed out the idea was floated last year and consultation continues. The Tories claim the plan risks undermining courts' independence.
The CPS is responsible for prosecuting people in England and Wales charged with a criminal offence by the police.
Mr Blunkett suggested it could be called the Public Prosecution Service.
A Buckingham Palace spokeswoman has said: "We are aware of the changes and we will be consulted in due course."
The Conservatives claim the plan shows ministers have a republican agenda after renaming Her Majesty's Prison Service as the National Offender Management Service after its merger with the probation service.
But Tony Blair's official spokesman said: "We are slightly surprised that people were surprised."
He stressed no final decisions had been taken and consultation continued, including with the Queen.
He went on: "It is not to demean the role of the palace or the Queen."
The proposal was originally floated by the attorney general last January and by the home secretary in June 2003, he said.
And the director of public prosecutions, who heads the CPS, also brought up the idea two weeks ago.
The spokesman said there were no plans to change the tradition that CPS cases are brought as the "Crown v ..." in a symbol of the royal role.
Tackled at prime minister's questions, Mr Blair said the focus ought to be on the excellent work of the CPS, pointing to rising conviction rates.
"Whatever that change of name to the service, it will make no difference to the fact that the crown still mounts prosecutions," he told MPs.
Shadow attorney general Dominic Grieve raised the issue in the Commons, questioning whether Mr Blunkett was trying to extend political control over the courts.
He said: "The problem with all these proposals is that they risk undermining the independence of the judicial system and the administration of justice.
"They undermine the crown in its central role of ensuring the non-politicisation of the system justice and in the process they undermine our freedoms."
Mr Grieve was worried about the idea of prosecutors being on the side of the public.
The public interest may not be the same as the interest of a particular neighbourhood in a particular court case, he warned.
Solicitor General Harriet Harman dismissed his concerns, saying the possible name change was part of more general reforms of the CPS.
"We want to make sure that people have confidence in the criminal justice system as a whole," she told MPs.
"People understand what the police do, they understand what the courts do but many people are baffled about what the CPS does."
Changing the service's name could help address that problem, she suggested.
Mr Blunkett had only commented on the proposals in response to a question, she added.
Liberal Democrat spokesman David Heath said the plan smacked of confusion.
Former Director of Public Prosecutions Sir David Calvert-Smith told BBC Radio 4's World At One the change could bring benefits but the key question was whether they would be worth the cost and upheaval.