The Duchess has been taken to King Edward VII Hospital with acute morning sickness.
She is expected to stay in hospital for several days.
St James's Palace said in a statement: “Their Royal Highnesses The Duke and Duchess of Cambridge are very pleased to announce that The Duchess of Cambridge is expecting a baby."
It added: “The Duchess was admitted this afternoon to King Edward VII Hospital in central London with hyperemesis gravidarum.
“As the pregnancy is in its very early stages, Her Royal Highness is expected to stay in hospital for several days and will require a period of rest thereafter.”
Prime Minister David Cameron tweeted to say he was "delighted by the news".
The PM added: “They will make wonderful parents.”
The Queen and Duke of Edinburgh, the Prince of Wales and members of both families are delighted with the baby news, said a spokesman.
Bookmakers will be taking flurries of bets on what the Duke and Duchess will choose to call the eagerly anticipated new Prince or Princess.
Speculation as to what they might name their first child began even before Kate was pregnant with predictions posted ranging from Mary and Matilda to Edmund and George on the mumsnet website before their wedding.
Their decision - be it traditional or unusual - will most likely set a trend for the next generation of babies.
Royal youngsters are mostly given safe, historical names which are passed down through the monarchy such as James, Edward, Charles, George, Mary and Elizabeth.
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