His wife Blanche d'Alpuget released a statement on Thursday night confirming he died peacefully at home on Thursday.

"Today we lost Bob Hawke, a great Australian - many would say the greatest Australian of the post-war era," she said.

Read more: PM reflects on 'great Australian' Hawke

"Bob Hawke and Paul Keating and their governments modernised the Australian economy, paving the way for an unprecedented period of recession-free economic growth and job creation."

She will hold a private funeral with his children Sue, Stephen, Rosslyn and stepson, Louis, and his grandchildren and a memorial service will be held in Sydney in coming weeks.

Opposition leader Bill Shorten paid tribute to Mr Hawke, saying the labor movement "salutes our greatest son".

Read more: Reaction to former PM Bob Hawke's death

"The Labor Party gives thanks for the life of our longest-serving prime minister and Australians everywhere remember and honour a man who gave so much to the country and people he cared for so deeply," he said in a statement.

"The Australian people loved Bob Hawke because they knew Bob loved them, this was true to the very end.

Read more: Bob Hawke was Labor's greatest winner

"He was a leader of conviction - and a builder of consensus. But for Bob, consensus and co-operation never meant pursuing the lowest common denominator."

Mr Hawke led Labor to victory at the 1983, 1984, 1987 and 1990 elections, and his government went on to establish Medcare and Landcare, floated the Australian dollar and is credited, along with Paul Keating, with modernising the Australian economy.

Mr Hawke was Labor's most successful federal leader, known as much for his larrikinism as he was his policies that helped modernise post-war Australia.

He frequently sculled beers, making the Guinness Book of Records for downing a yard glass while a Rhodes Scholar at Oxford and even in his later years would indulge fans at the cricket by knocking back drinks.

But he gave up the drink while prime minister and proudly boasted he "didn't touch a drop" while in the top job.

The former ACTU leader rose through union and Labor ranks and won the party four elections, with his wife and mother to their children Hazel by his side.

But in 1991 he was dumped and replaced by his treasurer Paul Keating, his marriage hit the rocks and they eventually divorced, with Mr Hawke going on to marry Ms d'Alpuget in 1995.

Paul Keating, who served as treasurer under Mr Hawke and defeated him in a leadership ballot to become prime minister in 1991, said the death also represented the passing of "a partnership we formed with the Australian people".

"Bob possessed a moral framework for his important public life, both representing the workers of Australia and more broadly, the country at large," Mr Keating said on Thursday night.

"Bob, of course, was hoping for a Labor victory this weekend. His friends, too, were hoping he would see this.

"In what was our last collaboration, Bob and I were delighted to support Bill Shorten last week in recounting the rationale we employed in opening Australia to the world," he said.

"The country is much the poorer for Bob Hawke's passing."

Australian Associated Press, SMH and The Age.