Kate left Daniel to play with it for several minutes as she spoke to other visitors before coming back to retrieve it.
Speaking after the visit mother-of-two Mrs Williams, 30, whose mother-in-law survived the tragedy, described the “memorable” encounter.
She said: “He just stole her handbag. He took a shine to it and she let him play with it.”
Her mother-in-law, Carole Williams, described it as “priceless – something to remember”.
Marking their final day in their trip to Wales, Prince William and Princess Kate paid a poignant visit to the site where 116 children and 28 adults died in the Aberfan coal-tip disaster.
The royal couple appeared visibly moved as they arrived to pay their respects to all 144 people that died on the tragic day on October 21, 1966.
The garden stands on the site of the former Pantglas Junior School, which was destroyed in the landslide, commemorating all who lost their lives. The memorial was opened in 1974 by the late Queen Elizabeth II.
Kate and William were greeted by schoolchildren at the site, while survivor Gaynor Madgwick showed the princess a number of newspaper cuttings about previous royal visits to the area, MailOnline reports.
The princess laughed along and appeared completely unfazed, even moving away to speak to others in the crowd, while the mother tried to pry the accessory from her son’s grip.
The little one appeared to try and nibble at Kate’s small black handbag, and even nearly dropped it, before the mum quickly caught it and managed to take it away from the cheeky lad.
It comes as the Prince and Princess of Wales paid a visit to the Aberfan Memorial Garden on Friday, in the footsteps of the late Queen Elizabeth II, to pay their respects to those who lost their lives during the 1966 disaster.
After meeting with gathered crowds, Kate and William were then guided around the garden by another of the survivors from the tragedy, David Davies, and Professor Peter Vaughan, Lord Lieutenant of Mid Glamorgan.
The couple went on to share a photograph as they laid a floral tribute at the site, tweeting a message in English and Welsh which read: “In Aberfan to pay our respects to the 116 children and 28 adults who lost their lives on 21 October 1966.”
The late Queen Elizabeth visited the village of Aberfan on October 29 1966, just eight days following the disaster. There, she greeted families who had lost their children and went on to open the Aberfan Memorial Garden in 1974.
Meanwhile, King Charles also paid a visit to mark the 50th Anniversary of the disaster on October 21, 2016, where he attended the Aberfan and Merthyr Vale community centre.
