Europe's longest reigning monarch, had been suffering from lung, heart and kidney problems.

Rainier had ruled the tiny Mediterranean principality since 1949. He will be succeeded by Prince Albert, 47, who took over his father's royal duties last week as hopes faded that Rainier would recover.

Prince Rainier died this morning, a palace statement said.

Rainier brought Hollywood glamour to Monaco by marrying beautiful American actress Grace Kelly in 1956.

He transformed the world's smallest state, except for the Vatican, from a faded gambling centre into a billionaires' haven.

He strengthened the sovereignty of Monaco as enshrined by a 1917 treaty with France, its territorial waters and air space were recognised and it won a United Nations seat.

But Rainier - the world's second longest-serving monarch after King Bhumibol Adulyadej of Thailand - cut a lonely figure in later life as the media focussed on his children's problems.

Monaco was also charged with having become a mafia refuge for dirty money.

Princess Grace died in a car crash in 1982 on a mountain road and his daughters Stephanie and Caroline have had a succession of disastrous, high-profile relationships.

He never showed any sign of wanting to remarry. "I still feel her absence. It was a marriage of love," he said in 1999.

Rainier suffered several bouts of bronchitis and had several operations in recent years before he was taken to hospital for the last time on March 7 with a lung infection.