Stynes' wife Sam confirmed the AFL legend passed away at 8.20am "in the comfort of his own home, surrounded by friends and family". The Baillieu government has offered to hold a state funeral for the football legend, which the family has accepted.

"Jim was pain free, dignified and peaceful. (His children) Matisse and Tiernan were present," Sam Stynes wrote in a statement posted on Facebook.

She said the former Melbourne Demons president, who has battled an aggressive form of cancer, "continued to defy the odds" in his last week of life, attending a Melbourne vs Hawthorn match, son Tiernan's seventh birthday party and enjoying dinner on Friday night at Topolino's Italian restaurant "in his much-loved suburb of St Kilda".

"In his final days Jim was immersed with insurmountable love and tenderness surrounded by his family and some close friends in the comfort of his own home.

"On behalf of Jim my heartfelt thanks to all those who have so generously cared for, guided and supported Jim throughout his challenging cancer battle.

"It is an incredibly sad time, however Jim in his passing, has made us see that in our grief that we can smile in our hearts for a beautiful man who will forever hold a special place in the hearts of many. Jim’s lesson is that life was to be challenged and treasured."

Premier Ted Baillieu, who participated in a moments' silence and a small tribute ceremony in the middle of the MCG this morning, said he had spoken to Sam Stynes to offer a state funeral for Jim, whom he described as "an exceptional Victorian."

"This is something we can do for the family...they are pleased," Mr Baillieu said.

"In many respects (Jim) is the classic Victorian. He embraced the culture here, he charmed people, he reached out to people. He became a legend."

He said details of the funeral were yet to be finalised.

In a statement, Melbourne FC president Don McLardy said: ‘‘There are few places in Australia that have not heard or been touched by the legend of Jim Stynes - the affable Irishman who left his homeland to chase a dream, and succeeded beyond anyone's expectations.

‘‘In the next few weeks, you will hear from many who will tell you about his magnificent playing record, and why Kevin Sheedy says he is the greatest story in the history of the AFL.

‘‘You will also hear from many whose lives have been changed by Jim, mainly through contact with his incredible youth organisation Reach. Not just great achievers such as Jules Lund, Trisha Silvers and the like, but hundreds of young kids who openly say Jim Stynes 'changed my life'. Can there be a greater accolade than that?’’

McLardy said he spoke to Stynes for the last time on Friday and said he seemed calm.

"In the end he'd fought his fight and he was very peaceful at the end," McLardy told 3AW.

"He'd had a tremendous battle."

McLardy said he was stunned to see the ailing champion at the Demons' commencement dinner last week, when the club had presented him with a blazer.

"It was a pretty massive shock because he was pretty ill. It was that iron will (that got him there)."

Melbourne Football Club held a press conference this afternoon. Stynes stepped down from his role as president of the club last month.

Oncologist Grant McArthur from Peter MacCallum Cancer Centre described Stynes as a remarkable and inspiring man.

‘‘(He was) a very insightful, intelligent man,’’ he told radio station 3AW this morning.

‘‘He knew about his illness and what the ultimate outcome was ultimately going to be. He didn’t want to give up.’’

Professor McArthur said Stynes went public with his battle with cancer to help others.

‘‘He was an inspiring guy. He gave hope to others.’’

The sentiment was echoed by Prime Minister Julia Gillard, who paid tribute to an "absolute legend''.

"He showed such bravery in the face of his devastating illness, he’s shown courage to the Australian people. He will be very sorely missed," Ms Gillard said.

‘‘He’s come into the hearts of Australians for so much more than his footballing career.’’

AFL chief executive Andrew Demetriou said Stynes had made a significant contribution to the game and the community.

He said the AFL planned to honour Stynes, possibly in conjunction with Stynes’ youth organisation Reach.

Demetriou last spoke to Stynes just before Christmas and visited him a short time before that.

‘‘I think it is important that people, when the are alive and quite ill, are told about their significant contribution,’’ Demetriou told 3AW this morning.

‘‘We should all have been proud to know Jim Stynes and we are all the better for it.’’

Melbourne Lord Mayor Robert Doyle said Stynes, the 2010 Melburnian of the Year, had been an outstanding ambassador for the city.

"It was an absolute honour to know Jim and a privilege to name him 2010 Melburnian of the Year in recognition of his work with Reach Foundation," Cr Doyle said.

The mayor said Stynes work with Reach had helped more than half-a-million young Victorians.

"His loss is a great one for the football community, Melbourne and the many thousands of young people whose lives he touched throughout his career," he said.

The 45-year-old underwent brain surgery six times and had more than 20 tumours removed in the past three years.

He stepped down from his role as president of Melbourne Football Club last month.

Social media erupted with an outpouring of tributes for Stynes, whose name began trending worldwide on Twitter within minutes of his death becoming public.

‘‘Jim Stynes’’ also became the number one trending topic among Australian Twitter users as fans and celebrities expressed their sadness.

Cricketer Shane Warne, model Megan Gale and seven time Tour de France winner Lance Armstrong were among those to tweet condolences.

Acting Premier Peter Ryan, a Melbourne supporter, spoke emotionally about his memories of Stynes.

"Jimmy Stynes made a contribution which I think has become part of the folklore of this state, and it goes well beyond football."

The MCC and MCG flags will be flown at half mast today in tribute to Stynes.

Melbourne Football Club has tweeted links to Reach - www.reach.org.au - and the Peter Mac Cancer Foundation - www.petermac.org - for people wanting to donate money in tribute to Stynes.