Faye Minter, project co-ordinator, said the remains of a 23m (75ft) by 9m (30ft) structure had been found.
This, she said, could be remains of a palace referred to by the Venerable Bede in the 8th Century.
She said the remains had been found with aerial photography and geophysical surveys.
"We have discovered what we think is a large Anglo Saxon Hall, which could be the palace itself, if you could call it that," she said.
"We`re convinced we`ve found a royal settlement of very high status, and I suppose it would be a large hall rather than a palace as it would spring to mind to us."
The discovery will be announced later at a conference in Bury St Edmunds.
About 4,000 items, including intricate metalwork, coins and weights, have been found at Rendlesham. About 1,000 of them are Anglo-Saxon, Ms Minter said.
Dr Helen Geake of the British Museum said while the "palace" find was "incredibly exciting", it could be one of a number dotted around East Anglia.
"There would have been quite a few of these palaces or halls dotted around," she said.
"The king [of the time] would have toured his kingdom in order to show his magnificence to his people, so he would have had lots of places to base himself around East Anglia."
It is thought Rendlesham and Sutton Hoo were intimately linked - with Sutton Hoo being the burial place of the king at Rendlesham.
The discovery at Sutton Hoo was made in 1939 when the landowner Edith Pretty asked archaeologist Basil Brown to investigate the largest of several mounds on her property.
Beneath the mound was the imprint of a 27m (88ft) ship. At its centre was a ruined burial chamber packed with treasures.
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