A one-day national mourning was declared in honour of the legend who had the rare distinction of playing the 'shehnai' as the Indian flag was unfurled at the historic Red Fort in New Delhi to mark the country's independence from Britain in 1947.

On Monday, flags flew at half-mast at government buildings while schools and government offices were closed in Uttar Pradesh, where Khan lived and died in his hometown of Varanasi.

Prime Minister Manmohan Singh led the country in mourning Khan.

"A true symbol of our composite culture, Khan Sahib, through his mellifluous rendering of the shehnai, showed us that while God may manifest himself in many forms, piety finds its true expression through music," Singh said in a statement.

"Ustad Bismillah Khan Sahib was a great son of India."

Khan, who was awarded India's highest civilian award, the Bharat Ratna, in 2001, was born into a family of musicians who played for royalty.

He transfixed generations of audiences across the world with his soulful rendition of classical music on the 'shehnai', which is played during marriages as well as religious events.

Khan, suffering from age-related problems, was admitted to a hospital in Varanasi more than a week ago.

"He had shown improvement over the past two days, but continued to feel very weak," Khan's personal secretary Syed Javed Ahmed told Reuters.

The musician is survived by five sons, three daughters and a large number of grandchildren and great grandchildren.

"So sweet was his shehnai, no one could play like him and no one will be able to play like him ever," Lata Mangeshkar, India's most famous singer, told a TV news channel.

The maestro had said the shehnai mattered to him more than anything.

"By the grace of God, when this (shehnai) is in my hands, all the wealth of the world could be brought to me, and I'd say: Get about your business, take it away," Khan said in a TV interview last year.