The Queen's grandfather George V is said to have started the bizarre tradition before the war.
In the past Palace staff have received luxurious puddings from brands including Harrods or Fortnum & Mason.
But according to Hello magazine the Queen has saved money this year by downgrading to Tesco.
Staff are expected to each receive a Tesco's Finest Matured Christmas Pudding, which has an RRP of £6.
They will also be given a card from the Queen and Prince Philip themselves.
Long-standing workers are also being handed shopping vouchers, which range in value up to £35.
All of the gifts are paid for personally by the Queen.
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