NEW YORK (AFP) - Ed Koch, the tough, fast-talking mayor of New York in the turbulent 1970s and 1980s and credited with rescuing the nation's largest city from financial ruin, died Friday, aged 88.

Koch, a witty and larger than life figure who remained a frequent public presence up to his last days, had been suffering heart and other health problems.

The current mayor, Michael Bloomberg, praised Koch as a "tireless, fearless and guileless civic leader" for his role in pulling New York back from the brink of financial collapse in the late 1970s.

"Ed helped lift the city out of its darkest days and set it on course for an incredible comeback," Bloomberg said, ordering flags to be lowered to half-mast.

Koch's greatest success was in his tough financial management during three terms between 1978 and 1989. But he also presided over an era when AIDS, homelessness, crime and racial tensions were rampant in the Big Apple.

More than anything Koch is remembered for his salty and colourful New Yorker style and sense of humour.

Koch frequently walked in public or stood outside subway stations, earning a reputation as man of the people. "How'm I doin'?" was his trademark greeting to voters.

The Democrat was famous for his accessibility and willingness to discuss any subject with the exception of his private life.

Arthur Browne, a reporter at the New York Daily News tabloid during the Koch era, remembered him for bringing in journalists every morning for a no-holds barred question and answer session.

"He was the most open to the press mayor that New York City has ever had," Browne told NY1 television. "He was a quirky quintessential outsider New Yorker who was very funny, entertaining.... People tended to love him." Veteran US Congressman Charles Rangel said that even the many who clashed with Koch recognised his sincerity and passion.