Plans for a State funeral for former prime minister Margaret Thatcher are in full swing as discussions have already started with her private office for the arrangements in case of any eventuality, it has been reported.

The Daily Mail has reported that though Baroness Thatcher is in good health, plans are under way for the smooth handling of the eventuality that involves the presence of the Queen and other dignitaries from around the world.

Lady Thatcher will become the first prime minister since Winston Churchill to receive a State funeral complete with a formal procession by the troops. However it is not clear yet whether she will lie in state in Westminster Hall or not. Winston Churchill was the only prime minister in the last two centuries who had been given this honour.

"What's in place at the moment is a contingency plan for a State funeral. It is yet to be decided whether Lady Thatcher will lie in state. They won't decide on the finer details until the actual time. There might be a new Prime Minister in place which could change things," the Daily Mail has quoted a senior official involved in the funeral plans as saying.

However, British troops' continued engagements in Afghanistan and Iraq are casting a shadow over the possibility of a formal procession by the military on the eve of Lady Thatcher's funeral.

The funeral is planned to be held at St Paul's Cathedral and it was chosen at her request, the newspaper report has said. Chapel of St Mary's Undercroft just below the Westminster Hall is another place consented by the Queen for Lady Thatcher to lie in the night before her funeral.

Arrangements for the funeral are believed to be led by Sir Malcolm Ross, the Queen's former Master of the Royal Household, who had handled many royal funerals before. And it was reported that the plans for Lady Thatcher's funeral had already been discussed with her son Sir Mark and daughter Carol.

The 86-year-old former prime minister had multiple strokes and suffers from short-term memory loss. The "Iron Lady" is reported to have spent her Christmas away from her children, as they failed to be with their frail mother. She currently lives with her long-term caretaker at her home in Belgravia, London.

Lady Thatcher spent her Christmas day with her caretaker Kate and her niece Jane Mayes, the Daily Mail has reported.

Meanwhile, "The Iron Lady," a film based on the life of Baroness Thatcher, will be in cinemas on January 6, 2012.

Earlier, there were reports that Tony Blair's obituary is being readied by the BBC, though the 58-year-old former prime minister is in good health.