Baroness Thatcher was Britain’s “greatest peacetime Prime Minister”, David Cameron said, as he led the tributes after her death from a stroke today at the age of 87.

Mr Cameron, who cut short a trip to Madrid and called off a diplomatic visit to Paris, described her as “the patriot Prime Minister,” saying: “She didn’t just lead our country, she saved our country.”

Political opponents, however, recalled that she also divided the country – not least during a bitter year-long miners’ strike — and that her tough economic medicine saw unemployment peak at more than three million.

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The first woman Prime Minister in Britain – and the West – won three general elections after ousting Labour in 1979, and her 11 years in Downing Street made her the UK’s longest-serving leader in modern times.

She remained “bitter” about having been evicted from Number 10 by the Conservative Party rather than voters, friends admitted.

Lady Thatcher died at The Ritz hotel in London, where she had been living since December after leaving hospital. Both Houses of Parliament will be recalled from their Easter recess tomorrow for special tributes. She will receive a ceremonial funeral with military honours at St Paul’s Cathedral next week.

World leaders are expected to attend the funeral of the woman dubbed the “Iron Lady”, who championed freedom for the countries in the Soviet Union and fought and won an unlikely war in the Falkland Islands in 1982.

President Barack Obama said: “The world has lost one of the great champions of freedom and liberty, and America has lost a true friend... Many of us will never forget her standing shoulder to shoulder with President Reagan, reminding the world that we are not simply carried along by the currents of history — we can shape them with moral conviction, unyielding courage and iron will.”

There were several “street parties” around the country, notably in Brixton and in Glasgow, where a crowd chanted “The witch is dead”, and “Maggie, Maggie, Maggie, dead, dead, dead”.

Speaking in Downing Street tonight, Mr Cameron said: “Margaret Thatcher took a country that was on its knees and made Britain stand tall again. We can’t deny that Lady Thatcher divided opinion. For many of us, she was and is an inspiration. For others she was a force to be defined against.

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“But if there is one thing that cuts through all of this – one thing that runs through everything she did – it was her lion-hearted love for this country.”

Sir John Major, who succeeded Lady Thatcher as Prime Minister, said: “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.”

Tony Blair, who persuaded Labour to swallow many of Lady Thatcher’s reforms, said: “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.”

Milkhail Gorbachev, the former Soviet Union leader, recalled that his relationship with Lady Thatcher was “difficult sometimes, not always smooth, but serious and responsible from both sides.” He added: “Eventually we were able to reach mutual understanding, and this contributed to changes in atmosphere between our country and the West, and to the end of the Cold War. Margaret Thatcher was a great politician. She will remain in our memory and in history.”

Charles Moore, her official biographer, said: “Everybody for hundreds of years will know if you say, she’s a real Margaret Thatcher, they’ll know what you mean. An ‘ism’ has been named after her. Her character’s very strong, her beliefs are very strong and this has been an enormously important part in the history of freedom in the western world.”

One of her last confidants to see her, Lord Powell, a key foreign affairs adviser, said he sat with for an hour on Sunday night. “I saw her last night,” he said. “I spent an hour or so with her and I am very pleased that I did.”

The Liberal Democrats and Labour suspended their campaigns for next month’s county council elections as a mark of respect only hours after launching them. But Ed Miliband was less effusive in his praise for Lady Thatcher than Mr Blair. He described her as a “unique” but “controversial figure”, saying: “I disagreed with lots of what she did.”

David Blunkett, the former Home Secretary and ex-leader of Sheffield City Council, summed up Labour’s mixed feelings about Lady Thatcher. He admitted she was “a ground-breaking politician” but declared: “I cannot forgive her for what she did to my city of Sheffield.”.”

Gordon Brown, who invited Lady Thatcher to revisit Downing Street and Chequers when he was Prime Minister, said: “Even those who disagreed with her never doubted the strength of her convictions and her unwavering belief in Britain’s destiny in the world.”

Lady Thatcher became patron of the Alzheimer’s Research UK charity in 2001. Her daughter Carol revealed that her mother had been diagnosed with dementia in 2008. Rebecca Wood, the charity’s chief executive, said: “Thanks to Lady Thatcher, we have made inroads with our research to defeat dementia. The answers will come too late for her, but they will come, and this will be another important part of our collective memory of her life and work.”

Further reading:

Obituary: Margaret Thatcher, Britain's first and only female prime minister

Margaret Thatcher: Round-up of today's full coverage