The taking and printing of the photos has been slammed as "reminiscent of the worst excesses of the press and paparazzi during the life of Diana, Princess of Wales".
In an earlier strongly worded statement, the palace said that Prince William and Kate had been "hugely saddened" by the invasion of their privacy while enjoying a private holiday in France.
Pictures of the Royal couple have been printed on the front cover and inside pages of French magazine Closer - with the lead headline bearing the words "Oh my God" in English.
The grainy images show the pair applying sunscreen while sunbathing in Provence last week, while staying at a château owned by the Queen's nephew Lord Linley.
"Their Royal Highnesses had every expectation of privacy in the remote house. It is unthinkable that anyone should take such photographs, let alone publish them," the palace statement added.
I hope that the Palace sues the photographer and the magazine. It is clearly an invasion of privacy.
Lawyers were being consulted on behalf of the young couple, who are currently in Malaysia as part of a Diamond Jubilee tour of the Far East.
Closer magazine has a UK edition, but it has moved to distance itself from the controversy - insisting the two editions, which have different publishers, make entirely independent editorial decisions.
"Closer UK takes its obligations under the PCC Code extremely seriously and would never publish topless images of a member of the Royal family on its cover or otherwise," the magazine said.
A woman from Northern Ireland, who is currently in Paris, told U105 there did appear to be a market for the pictures.
"There are a lot of news-stands around the Eiffel Tower here and the magazine is all over them - it's selling quite quickly," she said.
"On the front of the magazine it says 'Oh my God' in English. The rest of it's in French, but it seems it's aimed towards any British people over here."
A source close to Prime Minister David Cameron said that Number 10 "echoes the sadness of the Palace" over the publication of the pictures.
The controversy sparks fresh questions over the balance between privacy and the freedom of the press and publicist Max Clifford said he hoped the Royal couple would sue to set a precedent.
"I'm surprised, particularly considering what happened in France to William's mother 15 years ago. That adds to the concern and upset it will have caused them," he added.
"If the publisher knows that publishing a picture of Harry, William or Kate in a private setting will cost them a lot of money then they won't do it.
"If they pursue the French magazine and the photographer and successfully sue them - and it costs a lot of money - it's going to put everybody else off and that is why I hope it will happen."
The Duke and Duchess remain focused currently on their tour of Singapore, Malaysia, Solomon Islands and Tuvalu on behalf of HM the Queen.
St James’s Palace
According to legal experts, the magazine has broken notoriously strict French privacy laws - but is likely to have knowingly taken the risk because fines are no longer as hefty as they once were.
"It is totally forbidden," Thomas Roussineau, who specialises in privacy law, said.
"The castle is not the street, it is in a private place, and they are intimate pictures.
"The magazine will have a big revenue, and the amount of the sentence will not equal the revenue they will make - it will be a very small part of the revenue they will have from these pictures."
William and Kate spent the day in the Malaysian capital of Kuala Lumpur, where they visited a mosque for the first time.
It was before they arrived at the place of worship that they were told about the magazine's plans, announced on its website, to publish the pictures.
They looked grim-face at first, arriving at Kuala Lumpur airport to fly to Borneo, but the St James's Palace said they would not allow the publication of the photos to distract them from their duties.