Spain opera star Montserrat Caballe died overnight at the Sant Pau hospital. (AFP)

Spain's world-famous opera singer Montserrat Caballe has died in Barcelona on Saturday, a source at the hospital where she was being treated said.

The singer, who was known as one of the world's greatest voices during a career spanning half a century, had long suffered from ill health and was hospitalised in mid-September due to a gall bladder problem, local media reported.

"She died overnight at the Sant Pau hospital," the hospital source told AFP.

A service for the singer will be held on Sunday at 2pm local time (1200 GMT), with a funeral the following day, Barcelona authorities said.

Caballe made a global splash when "Barcelona", her song with Queen singer Freddie Mercury, became the anthem for the 1992 Olympic Games.

Born in April 1933 to a humble family in Barcelona, Maria de Montserrat Viviana Concepcion Caballe i Folc studied music at the Liceu Conservatory in the Catalan capital.

Caballe's big break came in 1965 when she stepped in for another singer in the notoriously difficult role of Lucrezia Borgia in Donizetti's opera in New York.

Her debut went down in opera history as one of the greatest overnight successes ever.

She went on to tour the world in a career spanning 50 years, garnering international acclaim for her creamy voice and dramatic power.

Career highlights included a triumphant performance in Bellini's "Norma" at La Scala in Milan in 1972.

Her vocal versatility meant she was as at home with Rossini and Donizetti as well as Mozart and Dvorak, while her energetic performance with Mercury showed her ability to break with tradition.

Spanish President Pedro Sanchez paid tribute to Caballe on Saturday, saying on Twitter that Spain had lost "a great ambassador of our country, a soprano recognised internationally".

"Montserrat Caballe, her voice and her tenderness, will always stay with us," he added.