As ever, the phenomenally productive Kate Saunders has delivered just in time. The Costa prize-winning author’s final novel, published posthumously this month, was rescued from her laptop with all her edits done other than some tiny changes overseen by her sister and publisher. Conscientious to the last, Saunders knew that she was dying with her body of work complete, and she admitted with a laugh from her hospital bed that it was quite a relief that she never had to go through the gruelling process of writing a novel again.

A Drop of Golden Sun is a children’s novel that follows a group of child actors and their guardians as they work on a life-changing film inspired by The Sound of Music. It is one of more than 20 novels Saunders wrote in what was an almost ridiculously multifaceted writing career. Always the chief family breadwinner, Saunders at times resembled a Victorian lady of letters, writing into the night and turning her hand to any form that would pay as she bounced between hack work and prize-winning literature. “I work all the hours that God gives,” she said before she died last year, aged 62.

This was a career in which she produced horoscopes, an award-winning first novel at the age of 26, a weekly column for the Sunday Times’s Style magazine, another for the Express, countless reviews, and two literary novels followed by a stream of commercial sagas. Finally, and most successfully, she wrote both her children’s novels and crime novels for adults: her Laetitia Rodd Mystery series. She was also a Booker prize judge and frequent broadcaster. As the writer Francis Wheen says: “She was not only a natural storyteller but an astonishingly versatile one.”

The signs were there early. While her five siblings played outside on family outings, she sat in the car and read or wrote, and her first poem was published in a children’s anthology when she was 12. “In a way, she wanted to belong to another age,” says her sister, the journalist Louisa Saunders. “She wasn’t really a proper teenager – it never suited her.”

At Camden School for Girls, she was obsessed with the Strauss musical dynasty, wore a T-shirt bearing the legend I Love Beethoven, and queued for the Proms instead of pop concerts. “Her comfort read was Middlemarch,” says Louisa. At the time, she was writing a first world war saga about her best friends that she read out in break time instalments, and which later became her first commercial blockbuster, Night Shall Overtake Us. Yet Saunders was far from the speccy nerd all this conjures: she was notably stylish, especially in richer years, and quite possibly the funniest person any of us knew.

“Kate Saunders was fun and funny, witty and wise, old at heart and yet loved by the young,” says the broadcaster and Private Eye editor Ian Hislop.

“Although she could be funny in print, she was even more hilarious in person, dramatising her life as if it were a theatrical comedy even when it was edging closer to tragedy,” says Wheen. Indeed, as the MS from which she had long suffered progressed, she cheerfully referred to her home as “the house of death”. Despite a life beset by disproportionate horrors, Saunders was eternally generous to other writers and helped so many novelists, myself among them, with her novel doctoring sessions, which were as uncomfortably accurate as they were inspiring.

Before the writing took off, Saunders had left school early to become an actor, with small parts at the National Theatre and roles in the series Angels and as Nicholas Lyndhurst’s police officer girlfriend in Only Fools and Horses. She predicted, entirely accurately, that despite 37 years of published work, her tabloid obituaries would focus on that one TV part.

There were extremely hard times: illness and a period in which she was unpublished in the UK, and kept on churning out her romantic fiction for the German market, supplemented by film options on her backlist. Saunders’s beloved son Felix then died very young, and she poured her grief into her most lauded children’s novel, the E Nesbit-inspired Five Children on the Western Front, which Hislop calls “one of the most moving books I have ever read”. It gained Saunders a Carnegie medal shortlisting, and won her the Costa children’s book award.

Saunders was shockingly daring, irreverent, foul-mouthed and searingly insightful. A true eccentric, in darkest times, she still made all of us laugh like no one else. “Witty and omnivorously well-read, Kate delighted in the absurd, her talk taking flight via sheer gifted storytelling brilliance,” says the short story writer Helen Simpson. “She was wonderfully funny, clever and brave.”

“She was one of the funniest people I have ever known,” says Wheen. “Lunch with her was one of my great pleasures: so much laughter that I felt quite squiffy even before the wine had arrived.” Indeed, her terrible, hilarious comments are still passed among family and friends with much glee. Saunders really should be here among us. But at least there’s one more novel to enjoy.

• A Drop of Golden Sun by Kate Saunders is published by Faber (£7.99). To support the Guardian and Observer order your copy at guardianbookshop.com. Delivery charges may apply