Sir Rex Hunt, who was governor of the Falkland Islands during the Argentine invasion in 1982 which triggered the Falklands War, has died aged 86.
A statement said Sir Rex, who had retired to Stockton on Tees, died in hospital on Sunday night.
The Legislative Assembly of the Falklands said he would be forever remembered for his years of service.
He was captured by the Argentine invasion force during the Falklands War and expelled from the islands.
He was granted the Freedom Of Stanley in 1985 to recognise his contributions to the islands.
Sir Rex, who grew up in Redcar in North Yorkshire, took up his post as governor of the island in 1980.
After Argentine forces landed on the islands in April 2 1982, Sir Rex took the difficult decision to order the token group of British marines defending the territory to surrender.
He put on his full ceremonial uniform and told the invading commander: "You have landed unlawfully on British territory and I order you to remove yourself and your troops forthwith."
The Argentines, who call the islands Las Malvinas and say they are an integral part of their country, expelled Sir Rex to Uruguay, and he was later flown back to spend the war in the UK.
The islands recapture was completed by a British task force on June 14.
Sir Rex, who had joined what was then called the Colonial Service in 1952 after service in the RAF, continued to serve as Governor of the Falkands until 1985.
Interviewed in 2007, he was full of praise for the prime minister of the time Margaret Thatcher and the First Sea Lord Sir Henry Leach for acting swiftly to dispatch a task force to recover the islands.
"I had been told that there was no possible way of getting the Argentinians out of the Falklands if they had got there first.
"It was certainly Margaret Thatcher and Admiral Leach who changed the attitude of the rest of them altogether.
"He said we could have it (the Task Force) ready by Sunday and that was just what Maggie Thatcher wanted to hear.
"Thank goodness we had a decent person in charge, she got it going."
He added: "The first thing I said to people, giving speeches here [in the UK], was that it was worth it and I have never had a word back from any of the people who went there - no matter how badly injured - who said it wasn't worth it - not one."
David Cameron has lead tributes by saying: "Sir Rex Hunt should be a hero to everyone in Britain.
"His courage, resolve and judgement fired the spirit of the islanders and the British people to stand up to aggression and to defend the rights and freedom of the islanders."
Roger Edwards, on behalf of the Legislative Assembly of the Falkland Islands, said it had received the news of his death with "great sadness".
He said: "Sir Rex will forever be remembered in the islands for his years of service as governor, and particularly for his courage and dignity in facing the Argentine invasion in 1982.
"A loyal friend of the Falkland Islands, he served for many years as chairman of the Falkland Islands Association and as president of the UK Falkland Islands Trust.
"His passion and commitment to the Falkland Islands will be sorely missed. The thoughts and deepest sympathies of all Falkland Islanders are with his family and friends at this sad time."
The Foreign Secretary William Hague added: "Like the islanders themselves, he demonstrated great courage and fortitude in the face of Argentine aggression during the Falklands conflict.
"After the conflict, he contributed to the transformation of the islands into a vibrant, modern and successful democracy."
The issue of the Falkland Islands, which are 7,780 miles from the UK and 1,140 miles from Buenos Aires, has again become prominent in the last year, with Argentine President Cristina Fernandez reasserting her country's claim to the islands.
The islanders are holding a referendum next year on the future sovereignty of the archipelago.