He was Europe's longest-reigning monarch, married a Hollywood star and transformed his principality from sleepy resort to the world's most fashionable playground. Nick Morrison looks at the life of Prince Rainier.

IT is less than a mile square and is hemmed in by its geography, both France and Italy, mountains and Mediterranean. But its cliffs and outcrops are some of the most valuable land in the world; its villas are home to some of the world's richest and most glamorous people, and its casinos are glittering stars in their own right.

But Monaco was not always thus. Long carrying a reputation as a gamblers' paradise, it was described by the writer Somerset Maugham as "a sunny place for shady people". That it has risen to the unrivalled position it now occupies as the world's capital of enchantment is due in large part to Prince Rainier, who died yesterday.

Rainier, who had spent several weeks in hospital suffering from heart, kidney and lung problems before his death at the age of 81, was Europe's longest-reigning monarch, a baton which has now passed to Queen Elizabeth II.

When Rainier inherited the throne in 1949, Monaco was a quiet resort, popular with minor European aristocracy but with none of the cachet it was to subsequently acquire. The prince exploited its status as a tax haven to lure in the non-titled wealthy, capitalising on the freedom and gaiety of the post-war years.

But by far his biggest contribution to Monaco's emergence as the favourite haunt of the rich and famous was his 1956 marriage to film star Grace Kelly, an event which captivated the world. At their wedding ceremony, the 1,500 visiting journalists outnumbered the Monegasque army by eight to one.

Princess Grace brought glamour to one of Europe's oldest royal dynasties, the fairytale romance between the prince and the showgirl a source of fascination long before the days of celebrity saturation, a marriage that endured until her death in a car crash in 1982.

Rainier Louis Henri Maxence Bertrand Grimaldi was the 30th descendant of Otto Canella, the founder of the House of Grimaldi which has ruled Monaco since 1297. Originally from Genoa, the Grimaldis were forced into exile after taking the losing side in a civil war, finding safety by taking over the Castle of Monaco.

Born on May 31, 1925, Rainier's mother Princess Charlotte was the illegitimate daughter of Prince Louis II. Rainier, whose parents divorced after his birth, was educated in England, Switzerland and France, and in June 1944 joined the French army, serving in Alsace and later in Berlin and winning the Croix de Guerre and the Legion of Honour.

His mother having renounced her claim to the throne, he became Monaco's ruler at 26 on the death of his grandfather in 1949, inheriting one of the few absolute monarchies remaining in Europe.

His youth was marked by a long romance with French actress Gisele Pascal, and he became a fan of jazz and oceanography, later helping to finance undersea explorer Jacques Cousteau. He also fostered a love of fast cars, no doubt encouraged by the Grand Prix which had taken place in the principality since 1929.

In 1955 he met Kelly at the Cannes Film Festival, and they married the following year. She was Hollywood's hottest property, the 25-year-old star of films including To Catch a Thief and Oscar winner for The Country Girl, although her marriage and subsequent retirement from acting meant she made only 11 films.

Ten months after their marriage, Princess Caroline was born, followed by Prince Albert a year later and Princess Stephanie in 1965.

But if Kelly gave Rainier the glamour he needed to turn Monaco into a haven for playboys, it was by no means the only factor. A country that had no natural resources had to look elsewhere for its prosperity, and this Rainier did with gusto.

Tax in the principality had been abolished in 1869, and Rainier saw this as the key to his plans. He resisted all attempts to end the tax free regime, including a bid by General de Gaulle to bring Monaco under French tax law in 1962.

Monaco's development was overseen by the Societe des Bains de Mer et Du Cercle des Etrangers, the company founded in 1863 which runs the principality's casinos and owns many of its properties. The Grimaldis own a 69.6 per cent controlling stake in the company, known as SBM.

Under Rainier's direction, SBM was responsible for building new luxury hotels, restaurants and nightclubs. His reign also saw the principality increase its territory by 20 per cent, through reclaiming land from the sea, and the construction of the world's largest floating breakwater, longer than a football pitch and providing moorings for more luxury yachts. His nickname of "the builder prince" was well-deserved.

But as well as attracting the European and American jet-set, Rainier also encouraged light industry to come to Monaco, turning it into a centre for the pharmaceutical and cosmetics industry. Gambling now accounts for less than five per cent of Monaco's income, which mainly comes from VAT, tourism, commerce and industry.

Rainier clung jealously to his powers, fighting off an attempt by Monaco's parliament to introduce reforms in 1958, and preventing Greek shipping tycoon Aristotle Onassis from taking over Monaco's casinos in the mid-1960s, but he did bring about the transformation of his rule from an absolute to a constitutional monarchy with the 1962 constitution.

In 1982, he suffered the tragedy of his wife's death in a car crash, which also badly injured his daughter Stephanie. The dignity with which Rainier reacted to his loss further endeared him to a people who already held him in great affection. He never remarried.

But Kelly's death seemed to open the floodgates on a tide of gossip over the Grimaldis, gossip which the prince endured with the same stoicism. Rumours their marriage had been unhappy, and that she had sought comfort in the arms of younger men, jostled with the antics of their now grown-up children in the gossip columns.

Eldest daughter Caroline has been married three times. A union with a French playboy lasted two years, a relationship with Italian Stefano Casiraghi ended when he was killed in a speedboat accident, and in 1999 she married Prince Ernst August of Hanover.

Youngest Stephanie had an affair with her bodyguard Daniel Ducret, who she later married, before he was pictured naked with a Belgian stripper. Ducret fathered her two eldest children, but she refused to name the father of a third, and in 2003 she married a Portuguese aristocrat, although that has also ended.

In contrast, Albert, who succeeds his father as ruler, has not married, although he has often been seen with a glamorous girl on his arm. In 2002, Rainier changed the law so the throne could pass to the female line if Albert had no sons, bypassing a clause which sees the principality revert to French control if the male line becomes extinct.

Rainier saw his country become the 183rd member of the United Nations, a recognition of its status as master of its own borders.

Whatever the travails of his personal and family life, Rainier leaves a legacy of a prosperous and solvent country, one which has exploited its few assets to their fullest, and a throne which has a secure place in the hearts of its people. His death brings to an end a golden age for Monaco, and closes a chapter on one of the most celebrated romances of the last century.