What was the official policy of British administration about the integration of Indian Princely States in 1947?

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A few things to note regarding this - 1. Official stand was that the state will lapse to independence but Mountbatten told almost every ruler that independence is impossible. 2. Reading's letter to the Nizam of Hyderabad clearly stated that Hyderabad is a subsidary of British Empire and not an independent state/state in alliance. While the British officially professed the first stand, India took the second. Seeing the impracticalities of independence, none but a handful pitched for independence - Hyderabad, Kashmir, Travancore, Manipur and Sikkim.

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