The princess died peacefully in her sleep in hospital early Saturday morning, a statement from Buckingham Palace said.
"The queen, with great sadness, has asked for the following announcement to be made immediately," said a statement released by the palace Saturday morning.
"Her beloved sister, Princess Margaret, died peacefully in her sleep this morning at 6:30 a.m. (local time) in the King Edward VII Hospital."
According to the statement Margaret's children, Lord Linley and Lady Sarah Chatto, were at her side.
"Princess Margaret suffered a further stroke yesterday afternoon. She developed cardiac problems during the night and was taken from Kensington Palace to the King Edward VII Hospital at 2:30 a.m. (local time)."
"Lord Linley and Lady Sarah were with her and the queen was kept fully informed throughout the night," the statement continued.
Princess Margaret was last seen in public before Christmas at Princess Alice, the Dowager Duchess of Gloucester's 100th birthday party.
Margaret was confined to a wheelchair and wore heavy dark glasses, her sight having been affected by a stroke.
Queen Elizabeth II left Sandringham, her Norfolk estate, Friday and traveled to Windsor where she remained in touch with developments.
The 101-year-old Queen Mother Elizabeth, who is recovering from a persistent cold, stayed on at Sandringham.
The royal death will cast a shadow over this year's Golden Jubilee celebrations, marking the 50th anniversary of the queen's accession to the throne.
A nationwide tour and a full program of Jubilee celebrations is planned for later in the year.
Later this month, on Feb. 18, the queen is due to start a visit to Jamaica, New Zealand and Australia.
Speaking on his plane on the way to Sierra Leone Saturday, Prime Minister Tony Blair expressed his sadness at the death.
"I'm deeply saddened to hear of the death of Princess Margaret. My thoughts are with the queen, Queen Elizabeth the Queen Mother and the rest of the royal family at this time," Blair said.
A heavy smoker for many years, she had suffered repeated respiratory illnesses and had part of a lung removed in January 1985. She had a mild stroke in February 1998 and another in March 2001.
In the 1950s, Margaret's ill-starred romance with royal aide Peter Townsend made headlines around the world due to his divorced status. Twenty-three years later, she became a divorcee herself the first in the queen's immediate family when her marriage to the photographer Lord Snowdon was dissolved.
She never remarried.
Despite the upheavals, the publicity and the differences in their personalities, the princess and her dignified sister remained close.
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