Sir Cyril represented the constituency of Rochdale as an MP, both for the Liberal Party and the Liberal Democrats, for 20 years.
He was one of the party's most recognisable and high-profile figures, retiring from Parliament in 1992.
Lib Dem leader Nick Clegg said Sir Cyril was a "larger-than-life" character who would be missed.
Sir Cyril was chief whip during Jeremy Thorpe's turbulent leadership of the party in the 1970s.
A Lib Dem spokesman said Sir Cyril had been ill for many months and had died on Friday morning, with members of his family by his bedside.
He was one of the party's most recognisable and high-profile figures, retiring from Parliament in 1992.
Lib Dem leader Nick Clegg said Sir Cyril was a "larger-than-life" character who would be missed.
Sir Cyril was chief whip during Jeremy Thorpe's turbulent leadership of the party in the 1970s.
A Lib Dem spokesman said Sir Cyril had been ill for many months and had died on Friday morning, with members of his family by his bedside.
Fiercely independent and blunt-speaking, Sir Cyril frequently clashed with his party over issues such as capital punishment, nuclear weapons and abortion.
He was sceptical about the party's merger with the SDP in the 1980s as well as its pact with Labour in the 1970s which kept Jim Callaghan's government in office.
He was a Labour supporter in his youth, defecting to the Liberals after serving as mayor of his birthplace, Rochdale.
After winning a by-election in 1972, he went on to play a key role in holding the party together during the 1970s amid allegations about Mr Thorpe's private life, which subsequently led the leader to resign.
He was sceptical about the party's merger with the SDP in the 1980s as well as its pact with Labour in the 1970s which kept Jim Callaghan's government in office.
He was a Labour supporter in his youth, defecting to the Liberals after serving as mayor of his birthplace, Rochdale.
After winning a by-election in 1972, he went on to play a key role in holding the party together during the 1970s amid allegations about Mr Thorpe's private life, which subsequently led the leader to resign.
Sir Cyril was made an MBE for his public services in 1966 and was knighted in 1988.
His brother Norman told the Press Association news agency: "Cyril passed away peacefully this morning with members of his family around him. I couldn't have asked for a better brother."
Deputy Prime Minister Mr Clegg said he was saddened to hear of the death of the "true Liberal" who was a friend to "everybody in Rochdale".
He said: "Cyril Smith was a larger-than-life character and one of the most recognisable and likeable politicians of his day."
He added: "Cyril was a colourful politician who kept the flame of Liberalism alive when the party was much smaller than it is today.
"Rochdale and Britain have sadly lost one of their great MPs, and I think we can safely say there will never be an MP quite like Cyril Smith again."
Former Lib Dem MP Paul Rowen, who lost his Rochdale seat to Labour at the election, said Sir Cyril would be sadly missed by people in the town and across the country.
"He has been a truly amazing ambassador for our town," he said. "He was towering figure for our party and led us through difficult times."
Liberal Democrat peer Lord Steel of Aikwood said Sir Cyril was a pioneer who served the party "diligently".
"Cyril was first and foremost Mr Rochdale," he said.
"His by-election picked up the Liberal Party from the disastrous 1970 election when we had only six seats, and started our recovery.
"His was also our first breakthrough in the industrial north of England."
His brother Norman told the Press Association news agency: "Cyril passed away peacefully this morning with members of his family around him. I couldn't have asked for a better brother."
Deputy Prime Minister Mr Clegg said he was saddened to hear of the death of the "true Liberal" who was a friend to "everybody in Rochdale".
He said: "Cyril Smith was a larger-than-life character and one of the most recognisable and likeable politicians of his day."
He added: "Cyril was a colourful politician who kept the flame of Liberalism alive when the party was much smaller than it is today.
"Rochdale and Britain have sadly lost one of their great MPs, and I think we can safely say there will never be an MP quite like Cyril Smith again."
Former Lib Dem MP Paul Rowen, who lost his Rochdale seat to Labour at the election, said Sir Cyril would be sadly missed by people in the town and across the country.
"He has been a truly amazing ambassador for our town," he said. "He was towering figure for our party and led us through difficult times."
Liberal Democrat peer Lord Steel of Aikwood said Sir Cyril was a pioneer who served the party "diligently".
"Cyril was first and foremost Mr Rochdale," he said.
"His by-election picked up the Liberal Party from the disastrous 1970 election when we had only six seats, and started our recovery.
"His was also our first breakthrough in the industrial north of England."
Nick Clegg Lib Dem leader says Rochdale and Britain have sadly lost one of their great MPs, and I think we can safely say there will never be an MP quite like Cyril Smith again”
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