The row that has turned the monarhy-loving public against the royals.
The prince's jet-set lifestyle and insistence that he will ignore criticism to push ahead with the controversial project has damaged the image of the Sutch royals, once seen as the model of a modern, European constitutional monarchy.
"The Crown Prince is behaving like a spoiled child," said one senior government official.
Crown Prince Willem-Alexander and his Argentinean-born wife Maxima are among a small group of wealthy investors developing an exclusive estate of villas and a five-star elite holiday resort on the Machangula peninsula in southern Mozambique.
The Dutch television channel RTL reported that the army had been called out to intervene after a land dispute resulted in a shoot-out between property developers and locals.
The project, known as Panorama, has also been linked to alleged environmental damage, and has been criticised for a lack of investment in the poor local African community.
Grassroots Orange associations, staunch royalist supporters who are responsible for co-ordinating festivities and ceremonies marking events that involve the Dutch monarchy, such as Queen's Day, are furious.
"It is most unfortunate to pick a country as poor as Mozambique as your holiday destination, particularly if you do so for privacy reasons," said Michiel Zonnevyle, the chairman of the Bond van Oranjeverenigingen.
The latest opinion polls show that almost 50 per cent of people want Jan Peter Balkenende, the Dutch prime minister, to demand that the Prince withdraw from the project. Nearly 40 per cent said the controversy had damaged the standing of his mother Queen Beatrix and the monarchy.
The prince, the property developer, Panorama, and local Mozambique authorities have said the project would benefit the population, since the construction of schools and a local clinic formed part of the plan.
In recent months, the Dutch royals have been hit by series of tax evasion and spending controversies at a time when their subjects are tightening their belts because of the economic crisis.
Jan Kikkert, a Dutch royal historian, said: "Politics, and Mr Balkenende in particular, should take a tougher stand with the Orange family. The current spate of incidents is crying out for an introduction of a purely ceremonial monarchy."
But, during a parliament debate on royal spending on Thursday, Mr Balkenende insisted that the price understood its "sensitivity" and that it would remain his "responsibility" to decide whether or not to pull out.
He also dismissed allegations of corruption. "The situation in the field does not constitute a problem for the construction of a holiday home. But we did want to have more distance between the prince and the project. So a foundation has been set up," he said.
Mr Kikkert said: "I've got the impression that Mr Balkenende is actually a bit scared of Queen Beatrix. That is connected, of course, to the dominant character of our head of state."
Dutch MPs have called for cuts to the monarchy's budget, set at 40 million euros (£37 million) after it emerged that 10 adult royals were entitled to free air travel, at a total cost to the tax payer of 610,000 euros.
"Private expenses should be financed privately," said Anja Timmer, a Labour MP.
Despite the recession and government public spending cuts, the royal household with its 319 full-time employees is due to receive a budget increase.
Royal tax exemption has become a hot issue since it was revealed in September that Princess Christina, 62, the Queen's youngest sister, was using a trust on the British island of Guernsey to avoid paying income and property tax on the majority of her assets.
The 42-year-old Crown Prince met his wife in Spain ten years ago. Princess Maxima, 38, said in an interview that he introduced himself only as "Alexander", so that she did not know he was royalty. When he later revealed himself to be a Crown Prince she thought he was joking.
Their marriage caused controversy because her father had been a minister during the Argentine dictatorship and "Dirty War".
