Former British prime minister Margaret Thatcher has died at the age of 87 following a stroke.

As Britain's longest-serving 20th century prime minister and the only woman to have held the job, Lady Thatcher presided over a decade of radical change in Britain.

Lady Thatcher died peacefully on Monday morning, said Lord Tim Bell, a spokesman for the Thatcher family.

"It is with great sadness that Mark and Carol Thatcher announced that their mother Baroness Thatcher died peacefully following a stroke this morning," Lord Bell said.

, saying Lady Thatcher was "a great leader, a great prime minister and a great Briton."

"It was with great sadness that I learned of Lady Thatcher's death," he said.

Queen Elizabeth II said she was sad to hear the news of Thatcher's death and sent a message of sympathy to her family.

From the day in May 1979 that she arrived in 10 Downing Street with her trademark handbag, the grocer's daughter used no-nonsense rhetoric and a steely power over her male acolytes to take stagnant Britain on a journey of economic reform.

She was also one of the few prime ministers to have an ideology named after her: Thatcherism's appeal was to the individual, its rhetoric was all about freedom and an end to class division, about less state control and more private enterprise, about smashing anything that believed in collective power, from trade unions to the Soviet bloc.

"There is no such thing as society," Lady Thatcher once famously declared, and some individuals indeed prospered.

Mass privatisations of state companies like British Telecom gave the common man and woman the chance to own shares, and business regarded her reforming zeal with almost religious reverence.

Under her Conservative government, Britain's legions of council house tenants got the chance to buy their own homes.

But others felt the sharp end of Thatcherism. Unemployment soared, the jobless grimly referring to themselves as one of "Maggie's 3 million".

Coal miners striking against pit closures were finally crushed in 1985 after a bitter struggle which saw pitched battles on picket lines, and there was unrest as police battled youths in the inner cities.

Still today, many blame a perceived lack of community spirit in Britain on Lady Thatcher's legacy.

Margaret Hilda Thatcher was born a shopkeeper's daughter in October 1925 in the town of Grantham, eastern England. She attended the local grammar school and won a place at Sommerville College, Oxford, where she obtained a second class degree in chemistry.

She married businessman Denis Thatcher in 1951, and two years later she bore twin children - journalist Carol and businessman Mark, who was fined $700,000 in 2005 for his involvement in a murky coup plot in Equatorial Guinea.

She was elected to parliament's lower House of Commons in 1959 and ousted former prime minister Edward Heath as opposition Conservative leader in 1975.

Maggie at war

Arguably Lady Thatcher's toughest test occurred early in her tenure, when in 1982 Argentina seized the Falkland Islands, a distant British possession in the south Atlantic.

British forces were dispatched, the islands recaptured after a bloody 74-day war, and Lady Thatcher's reputation soared.

Her right-wing Conservative Party, which had been flagging in the polls, defeated the Labour opposition in the 1983 election, a feat she repeated again in 1987.

Internationally, Lady Thatcher quickly won more adulation and respect than she would ever enjoy at home, forming a close alliance with US president Ronald Reagan in the Cold War stand-off with the Soviet Union.

It was Europe, however, that proved her undoing. Despite helping European partners forge the single market in 1987, Lady Thatcher always waxed sceptical about Europe, eventually igniting the coup within the Conservative Party that ended up with chancellor John Major replacing her in 1990.

By the time the Tory plotters closed in, the one-time Iron Lady's hold over the country was slipping. Anger over her plans to abolish local government rates and replace them with a flat-rate "poll tax" which would be levied regardless of income had led to a huge riot in London in March 1990, with thousands of protesters battling police in the centre of the capital.

Separately, the Europe issue came to a head in November 1990 when deputy PM Geoffrey Howe resigned over Mrs Thatcher's refusal to set a timetable for Britain to join the European single currency - which would go on to be the euro.

Standing up to deliver his resignation speech in the House of Commons, Mr Howe, a former staunch Thatcher ally, declared that her stance was "rather like sending your opening batsmen to the crease only for them to find the moment that the first balls are bowled that their bats have been broken before the game by the team captain".

Mr Howe's speech emboldened Tory rebels but it was down to another former Thatcher government insider, former defence minister Michael Heseltine, to attempt to deal the killer blow.

When Mr Heseltine challenged for the Tory leadership later in November, Mrs Thatcher won. But Mr Heseltine's 152 votes were enough to force the issue to a second ballot. Rather than face that humiliation, the Iron Lady resigned, leaving Downing Street in tears.

Even after Mr Major's accession, Lady Thatcher towered over the Tory right, inspiring Eurosceptics and ensuring that the party remained bitterly divided.

Despite her reputation as a wilful leader who fought tirelessly for her political convictions, Lady Thatcher took great exception to being portrayed by opponents as being hard and uncaring.

After moving to the upper House of Lords as Baroness Thatcher, she wrote her memoirs and carried out lecture tours around the world.

However, Lady Thatcher's doctor banned her from public speaking in 2002 following a series of small strokes which aides said left her sometimes confused and with a failing memory.

In 2008 Lady Thatcher collapsed at a House of Lords dinner due to low blood pressure and in the same year it was revealed that she had been suffering from dementia.

In 2009 rumours circulated in Canada that Lady Thatcher had died after a minister sent around a text message saying that his cat "Thatcher" had passed away.

News that the former leader had died reached even prime minister Stephen Harper, but the confusion was cleared up after calls to Downing Street.

ABC/AFP