Ruth Handler died in hospital from complications arising from colon cancer surgery, her husband of 63 years, Elliot Handler, said. She had also suffered from breast cancer, which led to a second, lesser-known career designing artificial breasts for woman who had had mastectomies.

Born Ruth Mosko, the youngest of 10 children of an immigrant Polish blacksmith in Denver, Colorado, she studied industrial design. In the 40s, with her husband and another designer, 'Matt' Mattson, she helped to form the toy company Mattel, called after his name and that of her husband. It became one of the world's most profitable companies.

In 1959 Handler designed her first Barbie, called after her daughter and modelled on wartime pin-ups.

She was called the Barbie Teenage Fashion Model and was an instant success, selling 350,000 in the first year. Soon the company was turning over more than $100 million a year.

Handler gave Barbie an ever-changing array of costumes, personas and friends. Ken, named after her son, arrived in 1961 and Christie, her African-American friend, in 1969.

Her outfits reflected the changing styles and over the years there were Barbie police officers, doctors, politicians and astronauts. A black Barbie was created in 1981.

Barbie's unnaturally bosomy shape provoked feminists to complain that she was an impossible and undesirable role model for girls. Artists used her in their work, sometimes provoking legal action from Mattel, but Barbie continued to defy criticism and sell in her millions, becoming the world's best-selling doll.

Handler had a mastectomy in 1970 and was dismayed to find that little had been done for women in her position in terms of prosthetics.

After being forced out of Mattel in 1975, she designed the Nearly Me artificial breast and became a campaigner on breast cancer issues.

She once joked: "I've lived my life from breast to breast."

In 1978 she was fined $57,000 (£39,000) and sentenced to 2,500 hours of community service for fraud and false reporting to the Securities and Exchange Commission. She said her illness had affected her judgment.

Her husband and Barbara survive her but Ken died from a brain tumour in 1994.