In November 1965 another competition was initiated by the Royal Mail to produce a new definitive postage stamp. Since 1952 the portrait of the Queen used on stamps had been a three-quarter photograph by Dorothy Wilding, but stamp designers found this difficult to fit in with other images on larger commemorative stamps, and so a new profile was required. Five artists were invited to participate, including Arnold.

Lettering such as 'Postage Revenue' or 'Postage' had to be included on the stamp design, along with the portrait and the value of the stamp, all linked together in a suitable frame. Apart from this, the artists were given very little information. Arnold produced a number of designs based on his coinage portrait of the Queen, and his approach was preferred by the Stamp Advisory Committee. Arnold began work in February 1966 on his design, producing a clay image of The Queen wearing a tiara and facing left (on coins she faced right). A mould was then taken from this design to produce a relief cast which was photographed and is now termed Machin's 'Coinage Head'. However the head on the stamp essays produced from this photograph was generally regarded as unrecognisable as The Queen. Arnold simplified his 'Coinage Head', and also removed the frame and lettering of the background of the essays, thinking that the image looked more dignified without. The Advisory Committee agreed and everything was omitted except the value of the stamp. Photographs of The Queen taken at this time by John Hedgecoe showed her wearing the diadem, rather than a tiara, and the Committee preferred Arnold's simplified 'Coinage Head' but suggested that the diadem should replace the tiara. Arnold created a new plaster cast in October 1966 – the 'Diadem Head', but he wished to retouch the model to eliminate the sharp cut at the shoulder, and added a corsage, producing the plaster cast, the 'Dressed Head'. A selection of essays was shown to The Queen, and she preferred the 'Dressed Head', choosing an olive brown sepia colour for the inland letter rate stamp (4d), and the first stamps in this new design were issued on 5^th June 1967. Arnold regarded the stamp as his greatest achievement, and his portrait of the Queen was to become one of the most enduring and instantly recognisable designs of the 20^th Century. The portrait has since been printed on over 200 billion British stamps (The British Postal Museum & Archive, 2007).

A Master photograph of the design had to be produced, however all the state-of-the-art equipment whilst excellent at producing an image of a design on a flat surface was unable to deal with any embossment such as Arnold's bas-relief portraits. It was essential to obtain a Master photograph which would show up the relief in detail before the technicians could begin to work on the flat photographic image. The final photograph was eventually produced on a misty autumn morning, outside the factory, using a Victorian camera and a photographer with a black sheet over his head!

In 1972 Arnold competed in designs for a commemorative crown to celebrate the Royal Silver Wedding, and again in 1977 for Her Majesty's Silver Jubilee. He won both of these competitions, and his success meant that he was invited to design coins for Australia, Malta, Hong Kong, Brunei, the Guernsey Jubilee and the Bahamas. Arnold also produced cameos in bas-relief of the Queen and the Queen Mother, and portrait medallions of Princess Anne, to commemorate her wedding, and Prince Charles.