Dr Scott was born in Bristol in the UK in 1934.
In 1959 she migrated to Tasmania where she began working at the University of Tasmania's English department.
She went on to become a senior lecturer and then served as head of the department from 1987.
Her retirement came in 1989 when she chose to pursue a full-time writing career.
She wrote four books of poetry, two novels, a libretto and numerous articles for periodicals. The publications included the novels The Baby-Farmer and Family Album, anthologies of poetry and a book on Port Arthur.
Her literary service included her role as State representative for the Association of the Study of Australian Literature.
Dr Scott was also chairwoman of the board of the Tasmanian magazine Island and patron of the Society of Women Writers Australia.
People will also remember her witty appearances on the ABC show Good News Week and as a participant in the "Great Debate" series.
A love of the Tasman Peninsula, where she lived after her partner died, was partly expressed through her strong community involvement.
Dr Scott was on the board of the Port Arthur Historic Site Management Authority.
She was also a member of the Tasman Trust, which raised funds and launched initiatives to help rebuild the area after the Port Arthur shooting.
She received many accolades including the Australia Council's Writer's Emeritus Award in 2005.
She was annointed to the inaugural Tasmanian Honour Roll of Women in May.
Arts Minister Lara Giddings said the State had lost a true icon who had made an outstanding contribution to cultural life in Tasmania.
"Her legendary wit combined with her celebrated writing and compassion for the vulnerable made her a much-loved Tasmanian," Ms Giddings said.
Historian Jennifer Livett said Scott was one of a small group of poets and prose writers who "brought Tasmanian writing to a new prominence".
Dr Scott was a staunch advocate for the environment and actively promoted the conservation of Tasmania's heritage until emphysema curtailed her activities.
Australian Greens Senators Bob Brown and Christine Milne also expressed their sadness at Dr Scott's death.
"Her legacy includes a great body of poetry through which her love of Tasmania, the Tasman Peninsula in particular and its people radiates between the lines," Senator Brown said.
Senator Milne said: "She was a great character who challenged us to think and who made us laugh."
Tasmanian Greens leader Peg Putt said Dr Scott as one of a kind for her wit, literary talent and compassion.
"Margaret Scott always spoke up without fear or favour, she was a marvellous role model and we will all miss her," Ms Putt said.
Emily's List convenor Michelle O'Byrne described Dr Scott as "just a good left-wing woman".
"She really did support women and good principles of social justice," Ms O'Byrne said.