Nine years after they met, Prince William proposed to his long-term girlfriend while on holiday in Kenya last month.
Diana's ring, now worn by Kate Middleton, is shown above along with Kate and William.
At a press conference Miss Middleton said that joining the Royal Family was a "daunting prospect" but added: "Hopefully I'll take it in my stride."
Her husband-to-be Prince William said: "The timing is right now, we are both very, very happy."
He added that giving Kate his mother, Diana's engagement ring was "my way of making sure my mother didn't miss out on today and the excitement".
The Royal wedding will take place in London in the spring or summer of 2011.
After getting married the couple will live in north Wales, where the Prince is serving as an RAF search and rescue helicopter pilot.