Mr Ahlberg was raised in Oldbury by his adoptive parents and went on to write more than 150 books over a career spanning nearly 50 years.
Many of his books were created with his wife, Janet, who illustrated their stories.
Together, the pair produced beloved titles including Peepo!, Each Peach Pear Plum, and Burglar Bill.
Francesca Dow, managing director of Penguin Random House Children’s, said: “He knew that making it perfect for children matters, and above all that the very best stories for children last forever.
“Allan’s are some of the very best – true classics, which will be loved by children and families for years to come.”
The Ahlbergs inventive and warm storytelling captured the imaginations of generations.
Their books for babies, including Each Peach Pear Plum (1978), Peepo! (1981), and The Baby’s Catalogue (1982) are still the staples of bookshelves for any young reader.
And their genre-defining picture books Funnybones (1980) and Starting School (1988) remain bestsellers every Halloween and back-to-school period.
Ms Dow said: “Allan was one of the most extraordinary authors I have had the privilege and pleasure to work with.
“His brilliant books – so many of them created with his late wife, Janet, the highly talented illustrator – have been described as ‘mini masterpieces’.
“And they are; wonderful satisfying stories, the perfect marriage of text and illustration, full of surprise and humour, with something new to spot with every reading, and always with the child reader at their heart.”
Mr Ahlberg’s early life in the Black Country shaped his storytelling and outlook.
Before becoming a teacher and writer, he worked as a postman, plumber’s mate, and gravedigger.
He trained at Sunderland Teacher Training College, where he met his wife.
Mr Ahlberg is survived by his wife Vanessa, his daughter Jessica, and stepdaughters Saskia and Johanna.