The couple, who met as students at St Andrews University, came to the decision last week and have separated amicably, a source said.
They conducted their courtship under the fierce glare of the public spotlight amidst growing speculation Kate would one day become queen.
But army officer William, 24, has seen Kate, 25, no more than once a week since he started training to be an armoured troop commander at Camp Bovington in Dorset last month.
Newspaper reports yesterday claimed the prince felt he was not ready for marriage and had sought advice from senior royals who urged him not to feel under pressure to marry his long-term girlfriend.
News of the split broke over the weekend when the Sun newspaper reported a “close friend” of the couple as saying: “As far as Kate is concerned, William simply hasn’t been paying her enough attention.
“She is stuck in London while he is living in an officers’ mess in Dorset.
“Kate feels hugely frustrated that their relationship just seems to be going backwards at a rate of knots.”
A source confirmed the break-up, adding: “That’s life.”
Kate was at her childhood home in Bucklebury, Berkshire, when the news broke.
Accompanied by family members, she left the detached property in a Land Rover Discovery without speaking to journalists.
It is understood her lawyers have asked for her and her parents to be left alone and have said neither she nor her family will be commenting.
PR guru, Max Clifford, said it had become “increasingly obvious” in recent months that William wanted to go out and enjoy himself. Just over a fortnight ago, the prince partied with a blonde student at his barracks. She later described him as a “perfect gentleman”.
On the same night, he was pictured with his arm around an 18-year-old Brazilian student, apparently cupping her breast.
Mr Clifford speculated the prince might already have found a new love, saying: “My instinct tells me that there is somebody else in the background.”
Kate has endured intense media interest since she was photographed with the prince on the slopes of posh Swiss ski resort, Klosters, in March 2004.
On her 25th birthday in January, she faced a press scrum outside her London flat on her way to work and her lawyers said she was being followed daily.
She recently made her first official complaint about harassment to the Press Complaints Commission over an image that appeared of her in the Daily Mirror, settling the matter after the paper apologised.
Kate’s treatment by photographers has been compared with the experience of William’s hounded mother: Diana, Princess of Wales.
In the early days of her relationship with Charles, Prince of Wales, Lady Diana Spencer was under siege at her London flat and she became the world’s most photographed woman.
Psychologist, Dr Linda Papadopoulos, said media interest must have been difficult for Kate.
“We talk about how difficult it is for people who become a celebrity over-night, but for her it was worse,” she said.
“It wasn’t what she was looking for, she just fell in love with a boy she met at college.”
Clarence House refused to discuss the break-up.
A spokesman for the prince said: “We don’t comment on Prince William’s private life.”