His death at 98 in the early hours of Tuesday brought to a close one of the most spectacular and controversial contributions to national politics, with the news uniting friend and foe with all parliamentary business suspended for the day.

A source close to the former prime minister said Mr Whitlam, a resident of Lulworth Nursing Home, where former NSW premier Neville Wran had also lived in his final days, had been ill for some time with a declining quality of life.

A state memorial service is now planned after an offer from Prime Minister Tony Abbott, who spoke glowingly of Mr Whitlam as a man of great vision and strength.

"Gough Whitlam is gone but not forgotten, he will never be forgotten" Mr Abbott said.

"His life was a life full of purpose. Proof, if proof were needed, that individuals do matter and they can make a lasting difference to the country they love. We have much to learn from the giants of those times," he said.

Mr Whitlam's death came a little more than 2 and a half years after that of his wife of 65 years, Margaret.

He is survived by daughter Catherine Dovey and three sons, Antony, Nicholas, and Stephen and five grandchildren.

In a stunning contrast to the ultra-divisive, high-conflict politics that bedevilled his prime ministership, the political community reflected harmony, focusing almost exclusively on the positive aspects of his public life.

Labor MPs held a memorial of their own on Tuesday, with leader Bill Shorten taking MPs on a short walk down Capital Hill to Old Parliament House – where Mr Whitlam had worked – for a short ceremony and commemorative drinks.

Flowers were laid on the steps of the building by members of the public where Mr Whitlam had delivered one of Australia's most well-known political speeches – "Well may we say God save the Queen, because nothing will save the Governor-General."

Born in 1916 in Melbourne, the intellectually prodigious Mr Whitlam had risen to lead his party to victory in 1972 before surviving another early election in 1974 and being bundled from office the following year in the constitutional crisis of 1975 in which he was sacked by then governor-general Sir John Kerr.

Political leaders past and present, from both the left and right, spoke unanimously of Mr Whitlam's courage, wit, and imagination as he first modernised a conservative and recalcitrant Labor Party, broadening its appeal and then pushing through to victory in the 1972 "It's Time" election.

It was a victory that had been a long time coming, breaking 23 consecutive years of conservative rule.

Mr Abbott praised Mr Whitlam's fierce intellect, noting his interest in everything from ecclesiastical law to history and politics.

He said Mr Whitlam "might not be one of our greatest prime ministers, but he was certainly one of the greatest personalities that our country has ever produced".

Communications Minister Malcolm Turnbull choked back tears as he lauded Mr Whitlam's contribution to social reform, the campaign for a republic, and his requirement for representation as a constituent of Mr Turnbull's inner Sydney seat.

He described Mr Whitlam as a man of "presence, eloquence and generosity of vision".

"He did not allow the hatred to eat away at him. So many people in our business, in politics, find themselves consumed by hatred and retire into bitter anecdotage, gnawing away at the injustices and betrayals they suffered in their life. Whitlam was able to rise above that," he said.

All former prime ministers made comments or issued statements, each noting the importance of Mr Whitlam in their own political journeys and in Australian politics more broadly.

Malcolm Fraser – who as opposition leader in 1975 forced the political crisis that brought about the spectacular end of the Whitlam government – spoke warmly of the man he subsequently came to call a friend.

Speaking to a saddened Labor caucus, elder statesman John Faulkner said making the speech about Mr Whitlam's death was the hardest speech of his entire political career.

Mr Shorten said the country had lost a giant who gave the nation a new sense of what it could rise to.

"Regardless of one's policies, the nation has lost a legend . . . he redefined our country and in doing so he changed the lives of a generation," he said. "He saw Australia as a modern nation where equality of opportunity belonged to all."

Other Labor prime ministers also praised the Whitlam legacy, with Paul Keating declaring he had "snapped the Menzian torpor" gripping Australia with his 1972 win, and Kevin Rudd describing his character as possessing a "deep blend of wide vision, broad intelligence and a boundless heart for the nation".