Sir Edward Heath was a man of "vision, principle and integrity", Tony Blair said in a tribute to the former Tory leader, who has died aged 89.
Mr Blair, who was leading House of Commons tributes to Sir Edward, said: "He was magnificent ... a prime minister our country can be proud of."
Business in the Commons and Lords has been cancelled to allow the tributes.
Tory leader Michael Howard said: "Today we remember a prime minister who was a most distinguished parliamentarian."
Lady Thatcher, who replaced him as Tory leader, earlier said "we are all in his debt".
"Ted Heath was a political giant. He was also, in every sense, the first modern Conservative leader - by his humble background, his grammar school education and by the fact of his democratic election.
"As prime minister, he was confronted by the enormous problems of post-war Britain. If those problems eventually defeated him, he had shown in the 1970 manifesto how they, in turn, would eventually be defeated.
"For that, and much else besides, we are all in his debt."
Sir Edward, who was knighted in 1992, won his first seat for the Tories in Bexley in 1950.
He led the Tory government as prime minister between 1970 and 1974, and was responsible for bringing Britain into what was then the European Economic Community, before losing the leadership of the Conservative Party to Margaret Thatcher in 1975.
Mr Howard said Sir Edward was a "political giant"
In the Commons Mr Blair told MPs how Sir Edward could be "very blunt", but "once you got to know him, very kind".
He drew laughter when he told how he first met Sir Edward in the 1980s.
"He said: 'Are you an MP?' 'Yes,' I said. 'Which party?' 'Labour,' I said. 'Well you don't look like it or sound like it,' he said.
Mr Blair said Sir Edward "would fill the House. I can picture him now, often speaking without a note, with humour, incisive argument and magisterial disdain for the opposing view, swatting away anyone ill-judged enough to make a hostile intervention".
Quoting former Labour Chancellor Roy Jenkins, a friend of Sir Edward, Mr Blair added: "He was a great lighthouse which stands there flashing out beams of light, indifferent to the waves which beat against him.
"That was indeed how he was - an extraordinary man, a great statesman, a prime minister our country can be proud of. We shall miss him."
Mr Howard described Sir Edward as one of the "political giants" of the 20th Century, who had made an "historic contribution" to Britain.
He said Sir Edward was "fearless in his views, and rock-like in his integrity, and who always sought to serve his country to the very best of his ability".
Liberal Democrat leader Charles Kennedy said: "Where Sir Edward was concerned on both a very human level and equally a statesmanlike level, he was a gifted man, a very good man and indeed a very great man ...we miss him very much."
Sir Edward's former colleague Lord Walker said history would "give him a high rating", adding he was a "very great man and an enormous patriot".
Former Labour Chancellor, Denis Healey, said he had been friends with Sir Edward for many years after meeting him at Oxford University.
Tony Benn said he was "to the left of Tony Blair"
"He represented the sensible wing of the Tory Party," he told BBC Radio Five Live.
Sir Edward's former political secretary Lord Hurd said: "He got us into the European Union. That was a huge step, a very difficult one, which I doubt would have happened without his particular kind of thoroughness and determination."
He told BBC Radio 4's Today programme that Sir Edward had been the first prime minister to confront trade union power - a move that Margaret Thatcher took note of and learned from.
However, Lord Hurd said Sir Edward had been someone who was "terrific to work for", but who lost interest in politics towards the end. "He was much more interested in places he'd been to, people, sailing, music - those were the things that still caught his attention," he said.
Lord Carrington, who was energy secretary in Sir Edward's Cabinet, said: "He was a great friend. He was a man of utmost integrity. You couldn't imagine Ted Heath doing anything dishonourable."
But Lord Carrington said his wife and he had found Sir Edward a "very lonely" man after they had lunch with him 10 days ago.
Former Tory Chancellor Lord Howe said Ted Heath was a "man of great commitment and energy".
Ex-Labour MP Tony Benn, who became good friends with Sir Edward said: "He was a far greater figure than Mrs Thatcher. She did enormous damage and his analysis of what she did was correct."
Sir Edward, seen with prime minister Harold MacMillan, retired in 2001
Sir Edward never forgave Mrs Thatcher for ousting him as leader and refused to serve in her Cabinet.
When asked in a TV interview if it was true that when Mrs Thatcher was herself deposed he said "rejoice, rejoice," he joked: "I think I said it three times."
Ex-Liberal leader Jeremy Thorpe said Sir Edward would be "sadly missed".
"In view of the widespread opposition to the common market among Conservatives at the time it took courage, integrity and sheer guts from Edward Heath to bring the Tory Party round," he said.