She had suffered a stroke on Friday afternoon and, after developing heart problems, was taken to hospital in London in the early hours of Saturday morning.

In a statement Buckingham Palace said: "The Queen, with great sadness, has asked for the following announcement to be made immediately.

Her coffin is due to be taken later on Saturday afternoon to her former home in Kensington Palace, where it will remain in her apartments until early next week.

Then it will be moved to the Queen's Chapel at St James's Palace where it will remain until the day before the funeral, details of which will be announced later on Saturday.

Tributes flood in

The Queen has returned from her Sandringham residence in Norfolk to Windsor Castle, where the union flag had been flying at half-mast.

Prince Charles is travelling to Sandringham to support the 101-year-old Queen Mother, who is suffering from a persistent cold. The Duke of Edinburgh is also there.

A St James's Palace spokesman said the Prince of Wales was "deeply saddened" by the news, as were his sons Princes William and Harry.

Lord Snowdon, Princess Margaret's former husband, said he and their children Lord Linley and Lady Sarah Chatto - who were at Margaret's bedside when she died - were "all extremely saddened".

UK Prime Minister Tony Blair led tributes from politicians and church leaders.

Speaking from Sierra Leone, he said: "I know the whole country will be deeply saddened by Princess Margaret's death. She will be remembered with a lot of affection.

"Before she was ill in the last few years, she gave a great deal of service to the country and our thoughts are with the Queen, the Queen Mother and all the Royal Family at this difficult time."

The Archbishop of Canterbury, Dr George Carey, said: "She was a much-loved member of our Royal Family and a great support to Her Majesty throughout the Queen's reign."

Russian president Vladimir Putin has sent his condolences to the Queen, as has the Pope in a telegram.

Jubilee year

A minute's silence has been observed at most sporting fixtures on Saturday afternoon.

The royal death will cast a shadow over the Queen's Golden Jubilee.

Wednesday marked the 50th anniversary of Accession Day, when, on the death of George VI, the Queen came to the throne.

On 18 February, the Queen is due to start a visit to Jamaica, New Zealand and Australia.

A nationwide tour and a full programme of Jubilee celebrations is planned for later in the year. It is not known whether the death will change any of the plans.

'Vivacious and fun'

Princess Margaret will be remembered by many for her glamorous lifestyle and turbulent love life.

In the 1950s she fell in love with a divorced man but renounced him after coming under political, family and church pressure.

A heavy smoker for many years, Margaret's health had been failing in recent decades and she had suffered at least two strokes.

She was last seen in public before Christmas at Princess Alice, the Dowager Duchess of Gloucester's 100th birthday party.

Lady Glenconner, the princess's former lady-in-waiting and close friend, said the princess had obviously been suffering when she saw her last week.

"One could not have really wanted her to have gone on. Her quality of life was not good," she said.

However, she added that her abiding memory would be of Margaret's vivacity.

"I just remember Princess Margaret being tremendously vivacious, and fun, and roaring with laughter.

"I'm going to miss her frightfully. She was one of my most very great friends."