PRINCESS Margaret was last night undergoing hospital tests in Barbados after suffering a mild stroke while on holiday in the Caribbean.

The 67-year-old princess was taken ill on Monday night at her holiday home on the island of Mustique.

The princess will be flown home from Barbados by air ambulance today according to local reports.

She was being kept under observation overnight at the Bayview Hospital, a private clinic on the outskirts of the capital Bridgetown.

It is understood the princess has suffered no serious paralysis and is responding well to treatment. Her condition is said to be ''stable''.

The princess is four years younger than the Queen, but unlike her sister has been a heavy smoker, although she gave up some years ago.

Her son, Viscount David Linley and his wife Serena were with the princess on Mustique until Sunday, before moving on to Florida where Viscount Linley is preparing an exhibition of his furniture.

The princess was taken ill while being entertained by

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friends in a neighbouring holiday chalet.

Medical staff from the Mustique Company, which runs and owns the island, were immediately called to her aid.

Mustique Company spokesman Ken Will said: ''She was taken from the house to the surgery on the island where she was treated in consultation with her own staff.

''The princess was later well enough to walk from the surgery when it was decided that she should return to her own home.''

The princess had been in Mustique for almost three weeks and was yesterday due to leave to continue her holiday in St Lucia.

Mr Will, assistant to the director of the Mustique Company, said the princess had been well enough to walk to the air ambulance taking her to Barbados.

''She was able to walk from her car across the tarmac to the plane. She was also sitting on the plane, there was no need for a stretcher,'' he said.

''Certainly at this stage the signs are positive. She has been consulted throughout and is fully cognisant.''

The Queen, other members of the royal family and her former husband Lord Snowdon were informed of Princess Margaret's stroke and are keeping in close touch with her doctors.

The princess has been in relatively good health since 1993 when she suffered a bout of pneumonia and was admitted to the King Edward VII Hospital for Officers in central London.

She gave up smoking some years ago after undergoing surgery in 1985 to remove a small section of her left lung which proved to be benign.