Britain's Prince William stands next to a portrait of his grandmother, Queen Elizabeth II, during the painting's unveiling at a state reception at Government House in Wellington on Thursday. Prince William, his wife, Kate, and their son Prince George are on a three-week tour of New Zealand and Australia. Photo: AFP

 Britain's Prince William and wife Kate honored New Zealand's war dead at a somber ceremony Thursday, then delighted the crowds when they went walkabout in the small South Island town of Blenheim.

The royal couple laid a wreath of red roses at the town's war memorial for the centenary of World War I and marked a minute's silence, before moving along ranks of aged veterans lined up with medals pinned to their chests.

The couple, who kicked off a three-week tour of New Zealand and Australia on Monday, then prompted cheers as they chatted and shook hands with the crowds of fans waving British flags - some of whom arrived at 4:30 am to grab a prime position along the barriers.

Their eight-month-old son Prince George, who enjoyed a play session with 10 Kiwi babies on Wednesday, stayed in Wellington where the family have based themselves for their 10-day New Zealand trip.

Kate, 32, wore a powder-blue coat with her hair tied back in a ponytail.

Blenheim resident Vicky King said locals could scarcely believe the couple had come to their town of about 30,000, which lies at the heart of the Marlborough wine-making region, with much of the population turning out to catch a glimpse of the royals.

"It's just so crazy that they came to Blenheim," she said after meeting Kate, describing it as a "surreal" experience.

"I was really nervous but she's a mum just like me ... she was very easy to talk to."

Her son Alton, who at nine months is just a little older than baby Prince George, startled Kate with a loud sneeze as she leaned in to look at him.

"She said 'Oh my goodness' and giggled - I said he was sorry he had a cold. The official behind her thought it was really funny," she said, adding, "Alton will be known for sneezing on royalty!"

AFP