His close friend David Tarratt, the publican of Lee's local pub, the Woolpack Inn in the Gloucestershire village of Slad, said a "blanket of sadness" had descended over the village and it would "never be the same without him".
"He was such an entertaining man who always had time for visitors who came to see him from all over the world," he said.
Lee had been ill since Christmas, having never fully recovered from surgery he underwent last year. He died in his Little Court cottage behind the pub overlooking the village with his wife and daughter by his side.
"It was good that they were with him when he took his last breath," said Mr Tarratt. "He had been very ill and had lost many of his faculties, although his mind was still sharp. His death was not a complete surprise. But it is still a very sad moment. He will be very much missed. He was such an entertaining man, so full of tricks and quips."
Despite his travels in Europe, Slad Valley was Lee's beloved landscape. He was brought up there by his mother and three older half-sisters and attending Slad Village School. He immortalised it in his first autobiography, Cider With Rosie, and two years ago he joined a successful campaign to save the valley, renamed Laurie Lee's Valley, from residential development.
Lee stood out as one of the great writers of this century whose work conjured up a world of earthy warmth and beauty.
Cider With Rosie almost immediately became an established classic piece of literature and was soon part of classroom syllabus work.
Lee also represented an era of brilliance and idealism that sprang from the Thirties - fighting in the Spanish Civil War, writing verse plays for radio and a contemporary of literary figures such as Cyril Connolly, Stephen Spender, John Lehmann, George Orwell and Cecil Day-Lewis.
Among those paying tribute to Lee yesterday was Jack Jones, 83, the former union leader who is now a campaigner for pensioners' rights, and was another volunteer in Spain.