Charlotte became the new favourite name for the royal baby on Sunday, overtaking long-time front-runner Alice as Britain eagerly waited to hear what its new princess will be called.

As William and Kate spent their first day at home with their baby, fevered speculation abounded as to what the Duke and Duchess of Cambridge will call their new bundle of joy.

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And punters have been rushing into betting shops to place wagers on a whole host of names.

"It has gone absolutely bananas," said Jessica Bridge, spokeswoman for bookmakers Ladbrokes.

"If it was a boy, I think there would have been excitement, but nowhere near as much hysteria as there is now because it's a little girl," she told AFP.

While the baby will be formally known as Her Royal Highness Princess (...) of Cambridge, all bets are on as to what name might go between the brackets.

Charlotte was trading with bookmakers Sunday at odds of around 3/1.

That means there is a one in four (25 percent) chance of this eventuality, and punters would have to gamble £1 to win £3.

Charlotte is followed by Alice at 4/1, Victoria at 5/1, Olivia at 6/1 and Elizabeth at 7/1, with Victoria and Olivia surging up the leaderboard.

"All these names have been heavily backed and it's showing no signs of slowing down," said Bridge.

Diana, the name of William's mother, had the next shortest odds at 10/1, then Alexandra at 14/1, Mary 20/1 and Grace, Abigail and Maria at 33/1.

Past form and current trends

Bridge said the size of the betting market was as big as for Prince George, William and Kate's one-year-old first-born.

"Punters got it right betting on a girl; now it's a question of whether they have got the right name," she said.

"Across the industry, the baby being a girl has cost all the bookmakers in Britain £500,000 ($750,000, 675,000 euros), and if she has one of the popular names, that's going to be touching £1 million."

As soon as it was announced that Kate was in hospital, the bookies suspended betting on markets such as the baby's gender, weight and hair colour.

"There were far too many people in the hospital who knew more than we knew," Bridge said.

Josh Powell from rival Paddy Powers bookmakers said punters had to look at past royal names and current trends.

"For this contest, proven course form looks at whether the name has previously been used for a monarch, or married into the royal family, while form is determined by the last few years of top 100 baby names in the UK," he said.

The new baby, fourth in line to the throne, is 33/1 with Paddy Power to become the next crowned monarch.

Heir to the throne Prince Charles, Queen Elizabeth II's eldest son, is 1/4, followed by his eldest son William at 5/2. George, third in line, is 20/1.

Bookmaker William Hill said the Duke and Duchess of Cambridge were 11/10 to stop at two children, 6/4 three, 5/1 four and 10/1 to have five or more offspring.

PICTURE: It's a Princess!