Lord Ashdown passed away on Saturday, the party confirmed.
He has been described as a ‘politician without an ounce of cynism” by former Lib Dem leader Nick Clegg and a “man of duty, passion and devotion to the country” by former Conservative Prime Minister and Commons opponent Sir John Major.
He never held a senior role in public office but is credited with turning the Liberal Democrats into a high profile party.
Lord Ashdown was Member of Parliament for Yeovil from 1983 to 2001 having entered politics after a successful military career where he served as a special forces commander and worked for MI6.
He was the Liberal Democrat’s longest serving leader, heading the party from 1988 to 1999 when he was succeeded by Charles Kennedy.
Mr Ashdown, who campaigned for Britian to Remain in the EU, stayed in politics and was created a life peer in 2001, one month after he retired from the House of Commons.
Current leader of the Liberal Democrats, Sir Vince Cable, said it was a “hugely sad day” for politics.
Sir Vince added: “He was famous for his politics, but his talents extended well beyond that arena.
Lord Ashdown revealed he had been diagnosed with bladder cancer in November
“He was an accomplished author, and had spent many years serving the country before he got near the House of Commons.
“Few people know how hard he fought to get into politics following his service in the marines and diplomatic service.
“He exercised every ounce of his considerable personal stamina to win the Yeovil seat.
“He was a personal example to me and to many other candidates.”
He was born in New Delhi in 1941 but brought up in Northern Ireland.
In November he announced in an emotional tweet that he had been diagnosed with bladder cancer.
Prime Minister Theresa May said: “It is with great sadness that I have learned of the passing of Lord Ashdown.
“Paddy Ashdown served his country with distinction from his career in the Royal Marines and intelligence services, as Member of Parliament for Yeovil, leader of the Liberal Democrats and later as High Representative of the International Community and EU Special Representative in Bosnia and Herzegovina.
“He dedicated his life to public service and he will be sorely missed.
“My thoughts and condolences are with his family and friends at this difficult time.”
Tributes have been paid to Lord Ashdown by politicians from across Parliament
Former leader Sir Nick Clegg, who took the party into coalition government with the Conservatives in 2010, said Mr Ashdown paid tribute to the former soldier.
He said: “Paddy was the reason I entered politics. He was the reason I became a liberal.
“And he became a lifelong mentor, friend and guide. Much will, rightly, be said about him in the days ahead. He was a soldier, a diplomat, a writer, a leader, a campaigner, a servant of his constituents, and an international statesman.
“But the thing I admired most in him is that rarest of gifts – a politician without an ounce of cynicism.”
“He was the most heartfelt person I have known – loyal and generous to a fault. Like so many others, I will miss him terribly.”
Paddy will be desperately missed by everyone at the Liberal Democrats as a dear friend and colleague, and remembered as someone who made an immeasurable contribution to furthering the cause of liberalism.
— Liberal Democrats (@LibDems) December 22, 2018
Former Prime Minister Sir John Major, who clashed with Lord Ashdown in the House of Commons, said he was a friend outside of Parliament.
He described the former Lib Dem leader as “a man of duty, passion, and devotion to the country he loved – right up to the very end.
“In Government, Paddy Ashdown was my opponent. In life, he was a much-valued friend.
“His loss will be felt deeply by many – and not least by myself.
“Throughout his life, Paddy was a true patriot, whose overriding wish was to serve his country: first, in the Marines, and then in both Houses of Parliament.
Paddy Ashdown has died aged 77
I have been so moved by all the lovely comments here. But PLEASE this does not merit a fuss. Many go through this. The NHS guys in Yeovil Hosp. are BRILLIANT. I have the best of people and the best of friends to fight this with, which makes me, as so often in my life, very lucky
— Paddy Ashdown (@paddyashdown) November 2, 2018
Sir John added: “I can attest to the fact that – even when he knew he was gravely ill – Paddy’s concern for the future of our country continued to dominate his thinking.
“I was not surprised. For Paddy, his country always came before personal or political advantage.”
Lord Ashdown paid tribute to the NHS when he was diagnosed with cancer last month.
He said staff at Yeovil District Hospital were “brilliant” and thanked well-wishers but in typically humble style urged them not to make a fuss.