Banerjee was 86. He is survived by his wife and two daughters.
The MP from Howrah constituency was admitted to the hospital a few days ago with problems in prostrate gland and kidney, Agriculture Marketing Minister Arup Roy said.
Banerjee's political career started with the Congress and he was an MLA between 1982 to 2006. He was also the deputy Leader of Opposition between 1996 to 2006.
He lost the 2006 Assembly election on Trinamool Congress ticket.
However, in the Lok Sabha polls three years later, he defeated Swadesh Chakraborty of the CPI(M) to become a Member of Parliament.
Born on August 28, 1928, Banerjee was a mechanical engineer and associated with various sports organisations like the Cricket Association of Bengal (CAB) and Indian Football Association (IFA).