The T-shirt, sold by online retailer Shot Dead in the Head, features the Queen's head on a female body with the breasts covered only by suspender straps with the slogan, "Loverly Jubilees," The Sun reported Monday.
"It's ridiculous, just awful. How tatty is that? It's terrible, especially from a British firm," said Margaret Tyler, 68, a prominent collector of royal memorabilia. "I think it's worse than the (Sex Pisols') God Save the Queen image in a way, or certainly on a par with it for awfulness."
Dave Zatchij of Shot Dead in the Head said the T-shirt is meant as a harmless joke.
"We do like to shock -- it's quite close to the line I think, but in a good way," he said. "I came up with the idea when I saw the word 'jubilee' and thought it looked like 'jubblies', which we all know is slang for boobs. I think it's just a bit of fun, rather than it being properly offensive."
A Buckingham Palace spokesman declined to comment.