(From top) Princes Harry and William with Prince Charles, Dominica Lawson, god-daughter of Princess Diana, and Queen Elizabeth with Diana’s brother Earl Spencer, at the unveiling of the fountain in London on Tuesday. (Reuters/AFP)

London, July 6 (Reuters): Britain’s House of Windsor buried the hatchet with the family of Princess Diana today, almost seven years after her brother savaged the royals in his funeral eulogy.

Queen Elizabeth, accused of reacting tardily to the outpouring of national grief after Diana’s death in 1997, appeared with Diana’s brother Earl Spencer for the first time since then to unveil a memorial to the “People’s Princess.”

“It is sometimes difficult to believe that it is now nearly seven years since we heard the news that Diana Princess of Wales had been killed in a car crash in Paris,” the monarch said at the sombre opening ceremony.

“Certainly the days that followed are etched on my memory as we as a family and nation came to terms with the loss, united by an extraordinary sense of shock, grief and sadness,” she added.

Acknowledging the rifts of the past, she said in a markedly personal speech: “Of course there were difficult times but memories mellow with the passing of the years.”

And she underlined the point in London’s Hyde Park as the Windsors and Spencers greeted each other in bright summer sunshine.

In the morning’s most keenly awaited encounter, Earl Spencer approached Diana’s former husband, Prince Charles, after the inauguration for a brief, formal conversation.

The queen said Diana had an extraordinary effect on people.

“Her drive to empathise with those in difficulty, hardship or distress, her willingness to embrace a new cause, her shrewd ability to size up all those she met, allowed her not only to touch people’s lives but to change them,” she added.

Bureaucratic wrangling and squabbling between design modernists and traditionalists repeatedly delayed the memorial, a ring-shaped water sculpture, to the point where the government was at one stage forced to intervene to keep it on track.

The £3.6-million (5.4 million euro) creation at the side of the Serpentine Gallery, designed by architect Kathryn Gustafson, faced delays and over-ran its budget by £600,000 (896,000 euros).

The queen, agreeing that a mere statue of her former daughter-in-law would not have been the best choice, said: “To present a likeness seemed at best unnecessary for someone whose image continues to exert such fascination the world over.”

At the 1997 funeral, Earl Spencer threw down the gauntlet when he vowed in his oration that Diana’s “blood family” would ensure her sons Princes William and Harry were not wrapped in the straitjacket of court tradition.

Spencer made a fervent plea for the princes to be allowed to grow in freedom. Their souls should be allowed to “sing openly”.

The royal family were accused of spurning a grieving nation when they declined to mourn in public in the days after the Paris crash.

But they won the nation round at the funeral for as many newspapers put it “leaving their ivory tower” when the queen made a televised tribute and bowed to public clamour for Buckingham Palace to fly the Union Jack flag at half-mast.