Edwin H. Land, whose invention of an instant camera changed the picture-taking habits of millions of people around the world, died yesterday in a hospital in Cambridge, Mass. He was 81 years old and lived in Cambridge.

For decades, as head of the Polaroid Corporation, Dr. Land provided the ideas and impetus for a long line of innovative photographic products.

The family declined to disclose the cause of death.

It was in response to his 3-year-old daughter's bewilderment at why a camera could not instantly produce pictures that Dr. Land conceived the idea of the instant camera in 1943. Dr. Land, a largely self-taught physicist, was out for a stroll when he hit upon the idea that led to his invention: a camera that would produce developed photographs as soon as its shutter clicked.

As Polaroid's longtime guiding light, he oversaw the development of products that included the first Polaroid Land Camera of 1948 and a long succession of other devices in the field that he termed instant photography.

Under Dr. Land, Polaroid's products gained wide acceptance. In the 1960's, a Polaroid marketing executive estimated that half the households in the United States had acquired Polaroid cameras.

That pioneering by Dr. Land, who held 533 patents by the time he retired in 1982, reflected what he said was a basic trait in himself and other scientists who were inventors.

"As I review the nature of the creative drive in the inventive scientists that have been around me, as well as in myself," he once wrote, "I find the first event is an urge to make a significant intellectual contribution that can be tangibly embodied in a product or process."

Over the decades Dr. Land lavished energy and creativity on the art of running a technologically innovative company. He spurred inventiveness among his colleagues at Polaroid and he repeatedly led efforts to overcome urgent technical problems that arose. Research and Manufacturing

He was also an ardent advocate of the importance of research. "I believe quite simply that the small company of the future will be as much a research organization as it is a manufacturing company," he wrote in 1944, while Polaroid was still modest in size, "and that this new kind of company is the frontier for the next generation."

Under his guidance Polaroid, which has been based in Cambridge since 1940, flourished after it began selling its instant-photography products.

The company ran into notable problems in the 1970's, including some involving the technically elegant SX-70, an instant camera with complex optics. Movie System Flops

Polaroid stock soared on expectations of explosive growth that proved unfounded, then plummeted. It fell to $14.13 a share from $149.50 between May 1972 and July 1974.

Describing those events in a 1987 book, "Land's Polaroid: a Company and the Man Who Invented It," Peter C. Wensberg, a former executive vice president of Polaroid, wrote: : "Polaroid was not the only body on the trading floor, but it had fallen further than most. Small comfort that the market was universally stricken."

The SX-70 was followed by the company's Polavision instant movie system, which had shortcomings in design, flopped commercially and was pulled off the market in 1979.

The Eastman Kodak Company followed Polaroid into the instant photography industry, only to lose a patent infringement case in 1985, several years after Mr. Land retired. Kodak was forced to leave the business the next year.

A Federal judge ordered Kodak last October to pay $909.4 million in compensation to Polaroid, a sum that was later reduced by $36 million.

In good times and bad, Dr. Land's life was tightly intertwined with the life of the company and of a predecessor, Land-Wheelwright Laboratories, which he co-founded in 1932. Its assets were acquired by Polaroid in 1937. Honorary Doctorates

Besides being Polaroid's chairman, Dr. Land was its president from 1937 to 1975. He was also variously chief executive officer, chief operating officer and director of research. His role in management ended when he stepped down as chairman at the age of 73.

After his retirement, Dr. Land continued to conduct research in several scientific fields. He created and financed the Rowland Institute for Science, a research organization in Cambridge, Mass., which in recent years developed microscopic laser "tweezer" beams able to manipulate single-cell organisms as small as bacteria. He founded the institute in 1980 with a multimillion-dollar gift from his considerable fortune.

His company also had a significant influence on laboratory technology; the rangefinder Polaroid originally invented for its SX-70 camera was also sold to many laboratories for use in the precise electronic measurement of distances.

Dr. Land sometimes described himself as a physicist and inventor, but he was also well versed in chemistry as well as optics and other sciences.

He was also an adviser to the Federal Government on military matters, advocating the use of photographic satellites in orbit to spy on enemy targets several years before such craft or the rockets to launch them came into being.

In 1955, he was chairman of a secret intelligence panel for President Dwight D. Eisenhower that advised a vigorous program to develop advanced means of reconnaissance, including satellites.

The nation's first attempts at launching spy satellites occurred in 1959. In a year, the craft were routinely sending pictures back to earth, opening a new era in military surveillance.

Edwin H Land