NDP leader Jack Layton delivers a keynote speech at the party's 50th Anniversary Convention in Vancouver, British Columbia, in this June 19, 2011 file photo. Layton, the charismatic leader of Canada's official opposition, died on August 22, 2011 just months after guiding his New Democratic Party to its strongest ever performance in the May federal election. [Photo/Agencies]

OTTAWA - The Canadian government will hold a state funeral for Jack Layton, leader of Canada's largest opposition New Democratic Party (NDP), who died of cancer at the age of 61 early on Monday, a senior official said.

Dimitri Soudas, spokesman for Canadian Prime Minister Stephen Harper, said in a brief message that Layton's wife Olivia Chow, a Chinese Canadian and Member of Parliament, has accepted Harper's offer of a state funeral for her husband.

"Canadians will have an opportunity to salute Jack Layton's contribution to public life as well as offer their heartfelt condolences, their thoughts and prayers to Mr. Layton's family," he said, adding that details of the funeral will follow in due course.

Canada's practice of providing state funerals for current and former Governors General, current and former Prime Ministers and current members of cabinet has been followed since the federal Dominion of Canada was formed on July 1, 1867.

Earlier on Monday, Layton's wife Chow said her husband passed away peacefully at 4:45 am at home in Toronto surrounded by family and loved ones.

Layton's death comes less than a month after he announced on July 25 that he was fighting an unnamed cancer, the second following his prostate cancer diagnosed in late 2009.

At a hoarse voice, an emaciated Layton said at a press conference in Toronto that he was confident he could come back to Parliament in the fall when it is in session.

On March 25, Layton's NDP joined other opposition parties to topple the ruling Conservative Party's government led by Prime Minister Stephen Harper, making it the first one defeated for being in contempt of Parliament in Canada's history.

To the surprise of many observers, Layton, who campaigned with the support of a cane across the country, led his party to become unprecedentedly the largest opposition party in the May 2 federal election, the first since NDP was founded in 1960.

The NDP victory was Layton's greatest political achievement in his entire life - first as an academic, then as a city councilor, then in federal politics.

Born in Montreal, Quebec on July 18, 1950, Layton had been riding a wave of popularity ahead of his death. It was his personal popularity that many credit for the NDP's "orange crush" in the 2011 federal election. He had even put the prime minister's office in his sights for the next election.

Layton was survived by his second wife Olivia Chow, and a son and a daughter of his first wife Sally Halford.

Canadian leaders issued statements on Monday, expressing condolences over Layton' death.

Prime Minister Stephen Harper issued a statement saying he was saddened to hear the news.

Harper said that on behalf of all Canadians, he salutes Jack's contribution to public life, a contribution that will be sorely missed.

"I know one thing: Jack gave his fight against cancer everything he had," he said. "Indeed, Jack never backed down from any fight."

In his statement, David Johnston, Governor General of Canada, said Layton, as leader of the official opposition party, was held in great esteem by Canadians for his passionate dedication to the public good.

"Throughout his career as a community leader and politician, he constantly strived to bring people together in the common cause of building a better Canada, and he did so with so with great energy and commitment." he said.

Johnston also said that Layton's fundamental decency and his love of the country serve as examples to us all, and he will be greatly missed.

Interim Liberal Party leader Bob Rae said the news took his breath away and that Layton's death is not just a loss for his party, but for all Canadians.

"It's a loss for the country because he was a political guy who believed strongly in politics and who had a lot of resilience and a lot of guts," Rae told local media.

In a signed letter to all Canadians, which was released after his death, Layton said that tens of thousands of Canadians have written to him in recent weeks to wish him well.

"I want to thank each and every one of you for your thoughtful, inspiring and often beautiful notes, cards and gifts," he said in the two-page letter. "Your spirit and love have lit up my home, my spirit, and my determination."

He also encouraged other cancer sufferers not lose their hope.

"Treatments and therapies have never been better in the face of this disease. You have every reason to be optimistic, determined, and focused on the future. My only other advice is to cherish every moment with those you love at every stage of your journey, as I have done this summer," he added.

"My friends, love is better than anger. Hope is better than fear. Optimism is better than despair. So let us be loving, hopeful and optimistic. And we'll change the world," Layton concluded.

Layton's chief of staff, Anne McGrath, said Monday that Layton's condition took a quick turn for the worse Sunday night.

Many Canadians sent flowers to Layton's constituency's office in Toronto, bidding farewell to their leader. The flag on the Peace Tower of Parliament building was lowered to half-mast.