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"A crate of Oloroso – sounds like a dream," wrote an excited Queen Mother to her friend the poet laureate Ted Hughes on hearing he was going to send her a few bottles. "I am not only very grateful but extremely touched that you should wish me to share in this lovely gift."
The handwritten letter shines a light on the revival of a slightly eccentric tradition – giving the poet laureate a butt of sherry – and goes on public display for the first time in Edinburgh.
On Wednesday night guests at the opening of the exhibition, which is part of the Edinburgh Art Festival and explores 350 years of poets laureate, were drinking some of the fino given to the present incumbent, Carol Ann Duffy.
The show at Holyroodhouse, the Queen's official residence in Scotland, brings together original manuscripts and rare editions that poets have been presenting to monarchs since John Dryden was appointed by Charles II in 1668, though he was sacked in 1689 for refusing to swear allegiance to William and Mary. That has not happened since, and Duffy can be reasonably confident she will be all right; the show is in part a celebration of her five years in the job, a half-way mark in what is now a 10-year appointment.
Duffy described the display as a beautiful exhibition which brought the poems and poets to life, stirring "pride, in poets and poetry". She said: "It is fascinating to see how we change as poets. The deference and the spin-doctoring of the early laureates has gone as the role has evolved."
Duffy said it was particularly moving to see Hughes' poems in his own writing, adding that he was her "favourite of all the laureates".
Because relatively little material from the early poets survives, the show concentrates on the poets laureate from Wordsworth onwards. He was the man, said the curator, Deborah Clarke, who changed the nature of the job by refusing to do it if he had to write to order.
Poets laureate were given sherry until Henry Pye, in 1790, relinquished his butt in exchange for a £27 yearly fee. The tradition returned, however, in 1984 with a delighted Hughes receiving his butt, a total of 720 bottles.
Duffy also has 720 bottles and sends some of hers to the Queen over Christmas.
Among the poems on display are three unpublished ones by John Masefield, who was poet laureate from 1930-67. He had close and affectionate relations with the monarchs, as revealed in one poem entitled Lines for January 20th death of his father, George V. The poem reads: "Beyond the river-side; The frozen fields stretch wide; To where the beech-clumps bide; Leafless and still; In snow upon the hill; I think of One who died."
As well as manuscripts in the exhibition there are artworks by Stephen Raw, which are visual representations of Duffy's poems.
Visitors will also be able to hear new recordings. Daniel Day-Lewis reads poems by his late father, the poet laureate Cecil Day-Lewis; and Timothy West reads poems by Dryden, Robert Bridges and Wordsworth.
The widow of Ted Hughes, Carol, was one of the visitors seeing the exhibition before its official public opening on Thursday . She said she found the show extremely moving and recalled how important the job had been to her husband.
"Ted took the role very seriously and when he was appointed, in December 1984, a lot of his friends and colleagues wrote to him saying 'we're very surprised you're doing this'. But he took the role of the monarchy, in the whole community of a country, very seriously."
Poetry for the Palace: poets laureate from Dryden to Duffy, is at the Queen's Gallery, Holyroodhouse Palace, 7 August to 2 November.
• This article was amended on 7 August 2014 to correct the year that Dryden was sacked as poet laureate.
