Monaco ? Prince Rainier III was suffering from heart and kidney failure and breathing through a respirator Wednesday as residents of this Riviera enclave braced for what many feared could be his final days.

A medical update from the palace described the 81-year-old prince’s condition as stable a day after he was moved into intensive care at Monaco’s Cardio-Thoracic Center.

The prince, whose actress wife, Grace Kelly, died in a 1982 car crash, was hospitalized more than two weeks ago with a chest infection. After a marked improvement, his health suddenly worsened.

A palace statement Wednesday said Rainier was transferred to the intensive care unit after developing a sudden respiratory infection “with cardiac and kidney failure.”

Outside the hospital, life continued as normal in this tiny principality wedged between the mountains and the Mediterranean. Some residents watched the palace — and its flagpole — for signs.

“While the flag is still up, we know he’s still alive and all is well,” said Sandrine Negre, 22, out strolling with friends near Rainier’s seaside hospital. “All Monegasques are watching that flag.”

Rainier, who assumed the throne in 1949, is revered by his subjects for having transformed Monaco — which is smaller than New York City’s Central Park — into a modern and elegant resort that is a magnet for jetsetters.

“This country is Prince Rainier,” said Patricia Vermeulen, a 53-year-old retired teacher who lives near the palace. “This fabulous adventure that is Monaco, he created it.”

Speaking his name brought tears to her eyes.

“We’ve known about his bad health for a long time. But each new time I feel the deepest sadness, as if it were my father,” said Vermeulen, setting down grocery bags to dab her eyes. “It’s like a knife in my heart each time.”

“He’s not gone,” she paused. “Not yet.”

Crown Prince Albert, 47 — Rainier’s heir — returned from abroad Tuesday to visit his father, as did Princess Caroline, 48. Princess Stephanie, 40, was seen entering and leaving the hospital.

In 2002, the constitution was revised to allow Albert to succeed his father, despite his lack of heirs.

According to Article 10 of the constitution, Princess Caroline would succeed Albert should he die without children. She, in turn, would be succeeded by her oldest son, Andrea Albert Pierre, now 20.