Gilbert Baker, the San-Francisco-based artist who created the rainbow flag as a symbol for the gay community, has died. He was 65.

Baker died in his sleep at his home here on Thursday night, BBC reported.

He initially designed an eight-colour flag in 1978 for the city's gay freedom day, the precursor to the modern pride parade.

A candlelight vigil was held on Friday night at Castro and Market streets in San Francisco, beneath his flag.

"Rainbows weep. Our world is far less colourful without you, my love. Gilbert Baker gave us the rainbow flag to unite us. Unite again," Screenwriter Dustin Lance Black tweeted.

California Senator Scott Weiner said Baker's work "helped define the modern LGBT movement". "Rest in power, Gilbert," he said.

The former US Army soldier who taught himself to sew, proposed the rainbow flag at a time when San Francisco's gay and lesbian community was struggling to find a symbol to unite under.

He personally rejected other ideas: the pink triangle, a Nazi badge reclaimed by gay activists that Baker found depressing, and the Greek letter lambda, which he deemed too obscure, San Francisco Chronicle reported.

His flag was later reduced to six stripes, removing pink and indigo, and swapping blue for turquoise in the original one.

Baker said he wanted to convey the idea of diversity and inclusion, using "something from nature to represent that our sexuality is a human right".

New York's Museum of Modern Art in 2015 acquired the flag for its design collection, calling it a "powerful design milestone".

"I decided that we should have a flag, that a flag fit us as a symbol, that we are a people, a tribe if you will," Baker had told the Museum.

"And flags are about proclaiming power, so it's very appropriate."