The British government said a ceremonial funeral with military honours would be held for former Prime Minister Margaret Thatcher, 87, who died on Monday.

The ceremony will not be a full state funeral, in line with her family's wishes.

It will be held at London's St Paul's Cathedral. No date was given and further details will be released over the next few days.

"A wide and diverse range of people and groups with connections to Lady Thatcher will be invited," Prime Minister David Cameron's office said in a statement.

"The service will be followed by a private cremation. All the arrangements being put in place are in line with wishes of Lady Thatcher's family."