La Rue, whose career spanned some 60 years, died peacefully in his sleep just before midnight on Sunday after a short illness, his spokeswoman said.
The 81-year-old star of stage and screen, once described by Bob Hope as “the most glamorous woman in the world”, had been battling cancer.
Bruce Forsyth last night said his friend still had millions of fans and that “all the people who worked with him over the years will be very sad today, as am I”.
“He was a great showman and his nightclub in London was the place to go when you were having a special night out,” he said.
Close friend Barbara Windsor, who has known La Rue since she was 18, said her last goodbye to the entertainer when she saw him three weeks ago.
“He was such a handsome-looking man. He looked so gorgeous. He was quiet which is very un-Danny. He got himself all nice for me. He kept having a little snooze and coming back and saying: ‘You won’t go, will you?’” she said last night.
Windsor said she told La Rue: “You look terrific and you look so handsome.” She said La Rue’s eyes lit up and he asked her if she fancied “a bit, then?”
Windsor said: “Those were the last words he ever said to me.”
She told how La Rue was protective of women, once jumping off stage “in full drag” and punching a man after a rude comment was yelled from the audience at Windsor during a show.
La Rue was born Daniel Patrick Carroll in Cork, off Magazine Rd in the city, the youngest in a family of five.
Aged nine, he was brought to England and he worked in a store in Exeter after leaving school aged 15.
He opened his own nightclub in 1964, attracting more than 13,000 members.
On the West End stage he triumphed in seven major shows including Come Spy With Me at the Whitehall Theatre, The Danny La Rue Show at the Prince of Wales theatre, and Aladdin at the London Palladium.
He took part in more than 50 pantomimes and his national tour with his Danny La Rue Show was also a box office success.
La Rue was also a big hit in Australia, where he would spend half his working year entertaining in television as well as theatre and cabaret seasons.
La Rue’s companion Annie Galbraith was with him at their home in Kent when he died.
Of him, she said: “Dear Danny spread joy everywhere. I am so honoured to have met him in my path through life.”
Brian Shaw, who worked as La Rue’s agent for more than 25 years, described him as “a true show business legend”.
He said: “He was a man of real class and real style. It’s just a very sad day.”