Many who did get an invitation will have to share bedrooms, move to cottages on the estate or sleep in servants' quarters.
It is quite a change from last year, when the Duke and Duchess of Cambridge spent Christmas Day with Kate's parents in Berkshire and Prince Harry was on duty in Afghanistan.
Read more: Prince William to spend Christmas with the in-laws
The year before, Prince Philip was in hospital for an operation.
Those likely to have servants' rooms include the Queen's nephew Viscount Linley, his wife Serena and their children. His sister Lady Sarah Chatto, her husband Daniel and children are also likely to be included.
They could be housed in what is known as the Bachelor Wing because it houses single male staff members, usually chefs and kitchen porters. The influx of guests could see them relegated to the footmen's bedrooms.
A source said: "Sandringham is a large house but everyone will be crammed in like sardines. There are just so many young royals now with children and the numbers keep going up.
"It's great for the Queen but a nightmare to cater for."
Sandringham House, in Norfolk, has been the private home of four generations of British monarchs since 1862.
Despite being set in 600 acres of woodland, the house is small by royal standards and quarters are said to be "cramped".
The Queen will insist on guests joining her today. The family follow the German tradition of opening presents on Christmas Eve before donning black tie for a candlelit banquet.
At 10pm, the women adjourn, leaving Prince Philip to serve port or brandy to the men.
On Christmas morning, they attend St Mary Magdalene, the church on the estate, before a turkey lunch at 1pm. They watch the Queen's Christmas message on television before playing games. Prince Philip usually organises a Boxing Day shoot.
- DAILY MAIL