"Odisha will observe one-day state mourning in honour of late Rabi Ray," an official statement issued by Chief Minister's office said.
The National Flag will be flown at half-mast across all government buildings for the day, the statement said adding that the body of the departed leader will be cremated with full state honour today.
Earlier at about 3 pm, Ray breathed his last while undergoing treatment at SCB Medical College Hospital in Cuttack.
He was 90 and is survived by his wife Dr Saraswati Swain.
Hundreds of people rushed to the hospital and later to his Kalyan Nagar residence in Cuttack to pay respect to the departed soul.
Many also joined in the procession when his body was taken to his alma mater, Ravenshaw University and MS Law College in Cuttack.
Prime Minister Narendra Modi, Chief Minister Naveen Patnaik and State Governor S C Jamir along with several other leaders across the country sent their condolences.
Born on November 26, 1926 in Puri district, Rabi Ray obtained his BA degree from Ravenshaw College and LLB degree from M S Law College in Cuttack city.
Love for the country and deep-rooted patriotism drove him to participate in unfurling the Tricolour on the majestic building Ravenshaw College early in 1947 for which he courted arrest and went to jail as a student.
Inspired by Rammohan Lohia, he founded Socialist Party in Odisha in 1956 and later went on to become the national secretary of the Party in 1960.
He was first elected to the Lok Sabha in 1967 from Puri parliamentary constituency and was the leader of Samyukta Socialist Party in the Lok Sabha.
In 1974, he was elected to Rajya Sabha from the State and was made a cabinet minister in 1977 by the then Prime Minister Morarji Desai when Ray was functioning as one of the secretaries of Janata Party.
However in 1989, when Rabi Ray was elected to the 9th Lok Sabha on a Janata Dal ticket from Kendrapara constituency, amid political uncertainty, he was unanimously elected as the Speaker to preside over one of the tumultuous House as Lok Sabha had witnessed Hung Parliament for the first time.
Besides his notable political contributions, Ray was also actively associated with several sociocultural organisations including Lohia Academy and Gram Vikash Foundation till he was indisposed due to old age.
A true socialist by nature, Rabi Ray has also contributed immensely to the field of literature.