Baroness Thatcher, Britain's Iron Lady, has died after suffering a stroke at the age of 87.
Her children Mark and Carol Thatcher announced that their mother had died peacefully following a stroke this morning.
Prime Minister David Cameron led tributes saying: "Today is a truly sad day for our country. We've lost a great prime minister, a great leader, a great Briton.
As our first woman prime minister, Margaret Thatcher succeeded against all the odds, and the real thing about Margaret Thatcher is that she didn't just lead our country, she saved our country, and I believe she'll go down as the greatest British peacetime prime minister."
He added: "Her legacy will be the fact she served her country so well, she saved our country and that she showed immense courage in doing so.
"And people will be learning about what she did and her achievements in decades, probably centuries to come."
Mr Cameron was meeting EU leaders in Spain but announced that he would return home early and is expected to arrive back in the country this afternoon.
Downing Street announced that Lady Thatcher would receive a full ceremonial funeral with honours at St Paul's Cathedral. Its flag was lowered as a mark of respect.
The flag at Downing Street flies at half mast
A statement from Buckingham Palace said: "The Queen was sad to hear the news of the death of Baroness Thatcher. Her Majesty will be sending a private message of sympathy to the family."
Labour leader Ed Miliband paid tribute saying: "She will be remembered as a unique figure. She reshaped the politics of a whole generation. She was Britain's first woman Prime Minister. She moved the centre ground of British politics and was a huge figure on the world stage.
"The Labour Party disagreed with much of what she did and she will always remain a controversial figure. But we can disagree and also greatly respect her political achievements and her personal strength.
"She also defined the politics of the 1980s. David Cameron, Nick Clegg and I all grew up in a politics shaped by Lady Thatcher. We took different paths but with her as the crucial figure of that era."
Floral tributes outside Lady Thatcher's Belgravia home
She suffered several small strokes in 2002 and was advised not to accept further public speaking engagements.
Her increasingly frail condition when she was seen - especially after the death of husband Denis in 2003 - led to frequent bouts of speculation about her health.
However, MPs and friends who saw her regularly said she remained alert and interested in politics, and she was not known to have deteriorated notably recently.
She was admitted to hospital shortly before Christmas where she underwent an operation to remove a growth from her bladder but was allowed to return home before new year.
Prime minister between 1979 and 1990, she has been credited with transforming a nation in one decade, putting Britain back among the leading industrial nations of the world.
Loved and loathed in equal measure, she crushed the unions and privatised vast swathes of British industry, as she led the Tories to three election victories.
Newly elected Mrs Thatcher arrives at Downing Street with husband Denis
She was nicknamed the Iron Lady by a Russian journalist in 1976 for her opposition to Soviet communism. It is a moniker that stuck, and which privately she was thought to enjoy, and was the title of a film in which Meryl Streep took the title role, which was released in 2011.
She was also memorably described by the then French president Francois Mitterrand with the back-handed compliment that she had the "eyes of Caligula and the mouth of Marilyn Monroe".
On the world stage with US president Ronald Reagan
Former Labour prime minister Tony Blair said: “Margaret Thatcher was a towering political figure. Very few leaders get to change not only the political landscape of their country but of the world. Margaret was such a leader. Her global impact was vast.
"And some of the changes she made in Britain were, in certain respects at least, retained by the 1997 Labour Government, and came to be implemented by governments around the world.
"As a person she was kind and generous spirited and was always immensely supportive to me as Prime Minister although we came from opposite sides of politics.
"Even if you disagreed with her as I did on certain issues and occasionally strongly, you could not disrespect her character or her contribution to Britain’s national life. She will be sadly missed."
Former Conservative prime minister Sir John Major described Baroness Thatcher as a "true force of nature" and a "political phenomenon".
Mrs Thatcher in Stanley, Falkland Islands 1983
He said: "In government, the UK was turned around under - and in large measure because of - her leadership.
"Her reforms of the economy, trades union law, and her recovery of the Falkland Islands elevated her above normal politics, and may not have been achieved under any other leader."
Liberal Democrat leader Nick Clegg said: "Margaret Thatcher was one of the defining figures in modern British politics.
"Whatever side of the political debate you stand on, no-one can deny that as prime minister she left a unique and lasting imprint on the country she served.
"She may have divided opinion during her time in politics but everyone will be united today in acknowledging the strength of her personality and the radicalism of her politics."
Lady Thatcher with Mr Cameron at Downing Street in 2010
Despite her toughness, few will forget the pictures of Lady Thatcher leaving Downing Street for the last time with her husband, Sir Denis, and tears in her eyes.
She was a woman who believed in hard work. The daughter of grocer Alfred Roberts she gained a degree in Chemistry at Oxford University, where she became president of the university's Conservative Association.
On leaving she worked as a research chemist but in February 1951 she was adopted as Conservative candidate for Dartford and at a dinner that day she met the wealthy and divorced businessman, Denis Thatcher. They married later that year.
He supported her during her unsuccessful campaigns for the seat and during her studies to become a barrister. She qualified in 1953, the same year she gave birth to twins Mark and Carol.
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