The former Group Captain Leonard Cheshire died of motor neurone disease. He is survived by his wife, Baroness Ryder of Warsaw, who founded the Sue Ryder Foundation for the sick and disabled.
John Major said in a statement last night: 'In war, Leonard Cheshire was a hero. In peace, he served his nation no less well. Together he and Sue Ryder touched directly the lives of thousands of people and gave them hope and encouragement.
'Through his example he reached millions more. He was, in the true sense of the word, a national hero.'
Lord Callaghan, the former Prime Minister, said: 'He was a very modest man, a man of the highest principles . . . I valued his friendship more than I can say.'
Lord Cheshire flew more than 100 bombing missions over Germany, the first in 1940 when the Battle of Britain was at its height. His courage brought him the DSO within a month.
Later he was awarded two bars to the DSO, a DFC, and finally the Victoria Cross in 1944. He took a drop in rank to command 617 Squadron of Dam Busters fame and in 1945 was British observer at Nagasaki, the second Japanese city to be devastated by the nuclear bomb.
Although filled with horror, he held to his belief that strength was vital to peace. Afterwards, he became a committed Roman Catholic.
The first community for sick former service men, which later became the Cheshire Foundation Homes covering 45 countries, was at his family home, Le Court in Hampshire. In 1959 he married his second wife Sue Ryder, a fellow Catholic and charity worker in her own right.
Lord Cheshire, whose life peerage was awarded in June 1991, was one of about 6,000 people in the UK suffering from the fatal muscle-wasting motor neurone disease. He was diagnosed as having the disease late last year and his deterioration was swift.
Lord Cheshire's last major public appearance was in June when he attended the unveiling of the statue of Arthur 'Bomber' Harris, head of Bomber Command during the Second World War.
Sir Michael Beetham, Marshall of the Royal Air Force and current president of the Bomber Command Association, said: 'He set the standard for everyone. He made as great a contribution among Bomber Command as anyone else.
'He was a quite remarkable man with incredible coolness and bravery - he was an inspiration to everyone. It is fair to say he has been a legend within the RAF.'
Obituary, page 32