Pinochet, 91, grabbed power in a coup and went on to become the best known of the South American dictators of the 1970s and 1980s. Under his regime more than 3,000 people died in political violence, many at the hands of repressive secret police.

He was accused of dozens of human rights violations but a lengthy effort to bring him to trial in Chile failed as his defense lawyers successfully argued that he was too ill to face charges.

Despite Pinochet's human rights record, many Chileans loved him and said he saved Chile from Marxism.

But even many loyal supporters abandoned him after it came out in 2004 that he had stashed some $27 million in secret off-shore bank accounts that were under investigation at the time of his death.

Augusto Pinochet, the former dictator who ruled Chile with an iron fist from 1973 until 1990, died in a high-security military hospital in the capital, Santiago, yesterday. His death from heart failure leaves a disputed legacy of brutal political repression; salvation from Marxism; and civil turmoil.

Doctors said they rushed the discredited dictator back into the hospital's intensive care unit yesterday morning after a sudden deterioration of his condition. He was only released from the unit last Thursday where he had been under treatment for an acute heart attack suffered one week ago after which he underwent an emergency angioplasty to widen a clogged artery.

In a brief announcement, the hospital said the one-time military strongman - who in recent years had been hounded by charges at home and abroad of human rights violations, corruption and fraud - had died at 2.15pm local time in Chile. He was 91.

His death sparked champagne-soaked celebrations, skirmishes with police and displays of lasting devotion as Chileans took an anguished look back at the dictator who brutally ruled for 17 years.

Celebrations broke out in several parts of the Chilean capital. At a major plaza, hundreds of cheering, flag-waving people gathered to pop champagne corks and toss confetti.

Outside the hospital where Pinochet died, Chileans who believed he saved them from communism wept and hoisted posters with the general's image. Some chanted that Pinochet and his feared secret police were Chile's saviours. " He will live forever in my memory - I love him as much as my own children," said Margarita Sanchez.

Meanwhile, police clashed with demonstrators who threw rocks and erected fire barricades that sent up thick plumes of smoke and blocked traffic on the city's main avenue. Tear gas and water cannons were used to disperse the protesters, many of them masked, who quickly regrouped.

Officials blamed the violence on a small contingent among the thousands of demonstrators who poured into the streets to denounce Pinochet's legacy. At least two bank offices were damaged.

The clashes spread past midnight to several working class districts and police said 23 officers, including a major and a captain, were injured.

Deputy Interior Minister Felipe Harboe said there had been a number of arrests but did not give a figure.

"The government makes an appeal to peace," Harboe said. "We do not want people to be affected today by facts of the past."

Chile's government said Pinochet will not receive the state funeral normally granted to former presidents, but only military honours at the Santiago military academy.

This morning, Pinochet's coffin was transferred to the Military Academy.

The coffin, covered with a Chilean flag and Pinochet's military hat and sword on top if it, was placed in a large hall, but the media was kept at a distance and could hardly see it through large windows.

As he requested, Pinochet will be cremated, according to son Marco Antonio, to avoid desecration of his tomb by "people who always hated him."

The government said it had authorised the Chilean flag to be flown at half-staff at military barracks nationwide.

In a carefully measured statement, Foreign Secretary Margaret Beckett said: " We note the passing of General Pinochet and want to pay tribute to the remarkable progress that Chile has made over the last 15 years as an open, stable and prosperous democracy."

That contrasted with the office of former prime minister Margaret Thatcher, a staunch ally of the former dictator, which said she was "greatly saddened" by news of his death.

Human rights activists responded more bluntly to the passing of a man who had become a pariah to most of the world. "Pinochet has died, and I don't think he's going to heaven," commented the human rights lawyer Geoffrey Robertson.

"His death does rob us of a proper trial and retribution for his victims." Years of illness allowed the General's lawyers to fend off court proceedings in his native Chile. For nearly two decades as Latin America's most infamous dictator, he was accused of ordering the deaths and disappearances of at least 3,000 Chileans, many killed at the hands of his secret police.

But even his most loyal supporters distanced themselves from Pinochet in 2004, however, when it emerged he had allegedly stashed as much as $27m (£14m) in foreign bank accounts.

Among those who felt betrayed by Pinochet were supporters who had helped fund his reconstruction efforts in the first years of his dictatorship - and may also have donated cash for his legal defence after he was arrested in London on human rights charges in 1998. He was held in Britain for 16 months.

In recent weeks, the General, faced new charges connected to the death of two bodyguards for Salvador Allende - the man from who Pinochet seized power - and was under house arrest.

For many Chileans, consigning Pinochet to history is long overdue. Even after he lost the presidency in 1990 in a national referendum, he remained commander-in-chief of the nation's armed forces for another eight years..

As the Pinochet era gradually faded, Chile emerged as one of Latin America's most stable democracies, marked earlier this year by the election of Michelle Bachelet of the centre-left Concertacion Coalition, which has ruled Chile since 1990.

The pencil-shaped Andean nation also remains in an economic boom, fed largely by mineral wealth and, arguably, by the free-market policies first introduced by Pinochet in place of the socialist doctrines of Mr Allende.

Divisions over the legacy of Pinochet still remain in Chile. "He's the biggest criminal in the history of our country," said Sola Sierra of the Association of Relatives of the Detained and Disappeared. But a rightist legislator, Iván Moreira called him "a liberator ... who brought democracy back to Chile." He went on: "He saved us from Marxism, from becoming a satellite colony of Soviet-Cuban imperialism."

Crediting Pinochet with the economic health of Chile today does not come easily as evidence has accumulated over the years of his utter disrespect of human rights. His regime systematically snatched political opponents from the streets and sent assassins around the globe to wipe out critics and resistors.

A Truth Commission in Chile established that 3,197 Chileans were killed during Pinochet's years in power and another 250,000 were locked up.

Amnesty International said Pinochet's death "should be a wake-up call for the authorities in Chile and governments everywhere, reminding them of the importance of speedy justice for human rights crimes, something Pinochet has now escaped."

With her four-year-old daughter in tow, she said her daughter she would never forget this day and her first sip of champagne.

But others say they were disappointed that Pinochet never saw his day in court for the 3,200 deaths and disappearances that took place under his rule.

"Pinochet has died without ever served justice," said Carmen Soria, the daughter of a Spanish diplomat assassinated during the dictatorship. "The courts and four government of the Concertacion [Chile's ruling left-wing coalition] were not able to condemn Pinochet.

It is ironic that he also died on the International Day for Human Rights. "This day is bittersweet because we weren't able to make him spend a single day in jail," lamented Ximena Muñoz, a human rights activist for an association for Chile's disappeared.

"Still, he's been judged by the public and that will go down in history, so today he is dead and you see today that it's a carnival for Chile's people. The dictator has died. Now we must forge ahead to try the rest of the assassins and torturers of his era."

But Pinochet maintains a fanatical following, and tens of thousands of weeping supporters surrounded the military hospital, where he was pronounced dead yesterday. "All of the hatred he inspires is so unfortunate," said a supporter, Juan Agustin Vargas, who stood wearing badges showing Pinochet's face, and singing patriotic military songs. "They don't recognise or thank him for having given us the liberty, the education, the social security and the economic stability we enjoy today."

Police remained on guard last night amid fears of violent clashes, and water cannons and tear gas were used to separate supporters and opponents in the capital and in Valparaiso, Chile's second-largest city.

Police were quickly deployed across the city and residents in working class districts erected barricades last night as news of Gen Pinochet's death left the capital in ferment and the country in shock.

Victims of human rights abuses during his 17-year rule gathered at a statue of Salvador Allende, the Chilean president who died during the 1973 coup, and urged the government to avoid giving any special honours at the burial. Their plea was heeded by President Michelle Bachelet, herself detained and tortured by Pinochet-era security forces, who said he would be buried with military honours, but would not be given a state funeral.

As police patrols fanned across the capital to avert clashes between friends and foes of the late dictator, poorer neighbourhoods lit tyres to celebrate. "These people are not celebrating the death of anyone," said Jorge Salinas, 50, who was throwing confetti into traffic. "It is to celebrate the end of a cycle of so much pain, so much dictatorship, so much torture. Pinochet signified many deaths, so much suffering for us. That's why you see such happiness in most of the people."

Torture

While champagne flowed downtown, a bitter crowd of some 700 Pinochet supporters gathered outside the military hospital. Some sang the national anthem while others assaulted journalists. "He leaves us today, but I remain proud to support him," said Ivan Moreira, a member of the lower house of the Chilean congress who was with the Pinochet family during a private mass at the hospital yesterday.

However, even in upper middle class neighbourhoods where Gen Pinochet was once revered, his reputation has disintegrated in recent years, because of ongoing inquiries into financial crimes, including tax evasion and illegal weapons deals.

Gen Pinochet was also under indictment in three cases stemming from the 3,000 people killed and thousands tortured during his regime, when he was feted by Washington as a bulwark against communism.

International reaction to his death was mixed and in some cases coy. Britain's foreign secretary, Margaret Beckett, said: "We note the passing of General Pinochet and want to pay tribute to the remarkable progress that Chile has made over the last 15 years as an open, stable and prosperous democracy."

A spokesman for Lady Thatcher, the former prime minister who cherished Gen Pinochet's assistance during the Falklands war with Argentina, said she was "greatly saddened" and had sent her condolences to his family, but would not be issuing a formal statement.

Gen Pinochet's critics regretted his passing only because it meant he could not be tried. Amnesty International said: "Pinochet's death should be a wakeup call for the authorities in Chile and governments everywhere, reminding them of the importance of speedy justice for human rights crimes - something that Pinochet has now escaped."

When Gen Pinochet seized power in 1973, he knew he would be enjoying the strong support of the US. The secretary of state and national security adviser, Henry Kissinger, was an admirer and anxious that no bridgehead for the left should be established in Latin America by President Allende.

"The prevailing mood among the Chilean military is to use the current opportunity to stamp out all vestiges of communism in Chile," said a CIA memo immediately after the coup. "Severe repression is planned." Another CIA document noted that the methods used by the junta's secret police were "out of the Spanish inquisition".

When Dr Kissinger and Gen Pinochet met in 1976, according to documents released in 1999, Dr Kissinger told him to ignore criticisms from within the US about his methods, assuring him that they were part of a communist propaganda exercise. He told him: "We wish your government well."

Dr Kissinger remained loyal to Gen Pinochet. When the retired dictator was arrested in London in 1998 and was facing extradition to Spain, he backed the campaign for him to be allowed to return home.

Gen Pinochet's link with Lady Thatcher was equally strong. She visited him when he was under house arrest, a meeting as portrayed in the television film Pinochet in Suburbia. She thanked him "for bringing democracy to Chile" and dismissed Allende's supporters as "a small minority of communists who nearly wrecked the country".

Last month, besieged by criticism and pending trials, the ailing general appeared to accept political, but not legal, responsibility for his regime's brutality. "Today, near the end of my days, I want to say that I harbour no rancour against anybody; that I love my fatherland above all; and that I take political responsibility for everything that was done which had no other goal than making Chile greater and avoiding its disintegration," he said.

Ultimately there was something pathetic about his final years - the years that remained to a man who was wont to boast when he ruled Chile that "not a leaf moves in this country if I'm not moving it".

The world watched astonished as a once all-powerful autocrat languished under house arrest on an estate in Wentworth, Surrey, after a Spanish judge had issued an arrest warrant against him for crimes against humanity.

After 16 months he was allowed to return home by the British government on grounds of ill-health. But whatever was left of the myth of Augusto Pinochet had been destroyed. No spectacle, surely, is more humiliating than that of a dictator removed from the levers of power and revealed as a mortal, flesh and blood like the rest of us, obliged to seek escape in the due processes of law that once he had so ruthlessly abused.

Thereafter he was merely a shrivelled old man, haunted by ghosts, living out his days in his own country - a country which, albeit by him, had moved far beyond him, to become once again a model of normality in the hemisphere.

In the end the courts couldn't try him for the deaths of the 3,000 people who had died or disappeared under Pinochet's rule, or for his part in Operation Condor, a syndicate of assassination run by half-a-dozen Latin American strongmen of the era. Nor could they lay a glove on him for the murder in 1976 of Orlando Letelier, the former ambassador and regime opponent who was blown up in a car bomb planted by the Chilean secret services in the heart the opulent diplomatic quarter of Washington DC. Nor could they extract even symbolic recompense for the losses suffered by the 200,000 people who were forced into exile to escape persecution or worse.

No, in the end, the Chilean authorities were after him for tax evasion, and for illicit foreign bank accounts in Washington and elsewhere. Famously, that was how Al Capone was brought to justice. And like Capone, Pinochet - the devout Catholic who declared that "I see myself as a good angel" - would, had he lived, probably have been sentenced as a financial criminal.

Meanwhile, not only has history's broader verdict yet to be delivered. The jury could prove to be hung. For the case for the defence must be considered. Individual leaders are the products of their era. Pinochet himself was a creature of the proxy war between the US and the Soviet Union, fought across Central and Latin America, Africa and Asia.

Yes, the turmoil in Chile before the coup of September 1973 was shamefully fomented by the United States. But there is no evidence that Washington directly ordered the coup. Pinochet sincerely believed that as a military leader, his duty was to save his country from a descent into communism and chaos. He was far from the first general in his part of the world to stage a coup, and he probably won't be the last. His problem was that the country in question was Chile; one reason the coup and its aftermath were so bloody was because of the very robustness of Chile's existing democratic traditions.

Ultimately moreover, even Pinochet had to bow to democracy. After 15 years, he was forced to call a referendum. He lost and two years later in 1990 ceded power to a leftwing government run by former exiles. But the subsequent success of Chile's economy is attributed by many to the free market reforms he introduced, guided by monetarist "Chicago School" economists who used Chile as a laboratory for the ideas of Milton Friedman.

Today, some economists talk of a "Chilean variation," a model for countries where economic growth can best be fostered under a largely authoritarian regime. Russia is one example and China, it could be argued, is another. The problem is the trade-off between prosperity and human rights. And the problem is still unresolved. "I love my fatherland above all," the old man said, as he celebrated his 91st birthday on 25 November, knowing the end was near. And not a few, even in the fatherland he brutalised, still love him in return.