And the Liberal Democrat leader, Charles Kennedy, welcomed the fact that an amicable agreement had been reached between the royal household and the Treasury which would put things on a stable footing for a further decade.
Tony Blair announced that the Queen would continue to receive £7.9m a year in a statement to the House of Commons on Tuesday.
He said the Queen had agreed to the freeze, which extends to 20 years the period in which the figure - first set in 1990 - has remained unchanged.
The settlement was possible because of the "very substantial efficiencies" by the Royal Family and by the relatively low level of inflation during the 1990s, said Mr Blair
He said cost-cutting had achieved savings in spending on the monarchy of 55% in real terms over the past 10 years.
The Civil List would also take on extra costs, he said, including staff pensions and some running costs of palaces, totalling around £25m over the next 10 year period.
'Continuing improvements'
Mr Blair said the settlement would continue to allow the Queen to carry out her wide-ranging duties as head of state while supporting "continuing improvements in efficiency by ensuring that financial and management responsibility go hand in hand".
Conservative leader William Hague supported the government's plans, saying that over the past 10 years there was evidence that the Civil List had been spent wisely and that the royal household had been well managed.
He suggested that the trustees should lay a further report if it became clear during the coming decade that inflation was significantly outpacing the chancellor's forecasts.
And the Liberal Democrat leader, Charles Kennedy, welcomed the fact that an amicable agreement had been reached between the royal household and the Treasury which would put things on a stable footing for a further decade.
He asked for the Civil List to be made fully accountable over the next 10 years.
But the Labour MP Dennis Skinner condemned the settlement. He said it was a disgrace that in contrast many elderly people had only been given only an extra 75-pence a week on their basic state pension.
And Labour's Jeremy Corbyn said the prime minister's statement was actually an "understatement" in terms of the amount of money spent on supporting the royals and asked for a comment on the "possibility of relocation of the Royal Family to somewhere smaller and more modest in the future".
Mr Blair said he could not agree with that.
The freeze, agreed in negotiations between Chancellor Gordon Brown and the royal household, follows the build-up of a £35m surplus in the previous 10-year period.
The extra money is the result of the Treasury having over-estimated the inflation rate at the time of the previous settlement in 1990.
Cost-cutting
At the same time the royal household has managed to substantially reduce running costs.
Expenditure on royal travel has been cut, including using a chartered helicopter rather than RAF aircraft which was said to cost double.
Around £800,000 has also been trimmed from the cost of running the royal residences.
Along with the payment to the Queen, the Civil List gives the Queen mother £643,000 and the Duke of Edinburgh £359,000.
They are the only three members of the family to be paid directly from the public purse. In 1994 the Queen agreed to pay for more minor royals out of her own pocket.
The Prince of Wales lives off money earned from the Duchy of Cornwall and is estimated to get more than £4m a year.