The King of Spain is to give up his £18 million yacht in what he has termed a "gesture of solidarity" with his recession-hit people.

King Juan Carlos will transfer responsibility for the 40-metre yacht Fortuna to the Spanish government, to re-allocate or sell as it chooses.

"The King has decided that at a time of crisis, when institutions are required to set an example, there is no sense in keeping a yacht like this, which costs a large amount of money to maintain," said a royal spokesman.

Failing health has meant the King's use of the yacht has dwindled in recent years, compared to earlier days when his love of fast cars earned him something of a playboy reputation.

His latest concession to austerity comes as unemployment in Spain stands at 27%.

Last year, the King accepted a 7% pay cut, along with his son, Crown prince Felipe, while his wife Queen Sofia now flies with budget airlines.

The Fortuna, which costs £21,000 to refuel, was bought in 2000 by a consortium of businessmen from Majorca, who gave it to the State for the King's use.

He was known to have owned several vessels, aboard which he held parties to entertain, among others, Prince Charles, Diana, Princess of Wales, Bill Clinton and King Abdullah of Jordan.

His supporters hope the decision will help boost his popularity, which suffered a dent recently when he was forced to apologise for going on an expensive elephant-hunting safari in Botswana that was seen as out of kilter with the public mood.

The King's son-in-law, Inaki Urdangarin, has been indicted as a suspect in the embezzlement of almost £7 million in public funds. He denies any wrongdoing.

The investigation has given rise to suspicion that the King may also have been involved, which Juan Carlos denies.