The 50-year-old had been staying with a friend at the three-star Janelas do Mar Hotel, in the Portuguese city of Albufeira in The Algarve.
Reports in Portugal state that he was beaten and left lying unconscious before paramedics rushed him to a Faro hospital with serious head injuries.
The UK Foreign and Commonwealth Office confirmed he died on Wednesday, unable to overcome his terrible injuries.
The Sunday Sun understands that Mr Haggath’s body will be flown back to the UK this week.
It is believed he was set upon by four youths suspected of assaulting an Irish citizen in the same neighbourhood last month.
Reports suggest Mr Haggath had been walking back to his hotel from the dangerous Montechoro area of Albufeira when he was targeted by thieves in the early hours. He is thought to have suffered serious head injuries including broken cheek bones, a fractured skull and bleeding on the brain.
Passers-by called the local ambulance service, which gave initial treatment at the scene.
Mr Haggath, from the Dunston area of Gateshead, and a keen player for Dunston Bowls Club, was found motionless by three fellow holidaymakers, one of whom told police he had been subjected to abuse moments earlier by the four youths.
The victim, who has two brothers in Tyneside, was in a critical condition when he was admitted to hospital, later being transferred to an intermediate care unit.
Ian Haggath died last Wednesday, a week after he was targeted by a gang of thieves as he walked back to his hotel.
