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The 59-year-old actress said she "sniggered" when the Duke of Cambridge presented her with the honor and even asked if she could give him a kiss.
"I love Prince William," she gushed. "I've known him since he was little, and we just sniggered at each other. I said, 'I can't kiss you, can I?' And he said, 'No don't!'"
However, Thompson didn't seem too bothered by the rejection.
"If you're first up, you have to be more formal on such an occasion," the Love Actually star said, "but he's looking wonderful and doing so well. He said, 'This day isn't about me, it's about you'.'"
"It's really lovely because I've always loved the boys, and I've always been a long-term correspondent with their dad," she said. "It's a very lovely feeling."