The prize, worth about $34,000, has gone to leaders of the Narmada Bachao Andolan (Save Narmada Valley campaign) to help the thousands who will be displaced by an Indian dam project, the group said.

In a statement released on Friday, they said: "The Andolan intends to use this money for providing relief to those tribal families who will lose their crops and land and their livelihood in the impending submergence."

At 136.5 metres high, the dam is the largest of 30 planned for the Narmada area.

The Indian Government says that the multi-purpose Sardar Sarovar project will irrigate more than 1.8m hectares, mostly in Gujarat, but also in Rajasthan, and provide water for the drought-prone areas of Kutch and Saurashtra in Gujarat.

Arundhati Roy's novel became an international bestseller

But its critics say the benefits of the dam project have been exaggerated.

They say more than 320,000 people will be displaced and the livelihood of thousands of others affected.

Ms Roy won the UK's premier literary prize in 1997 with her semi-autobiographical novel "The God Of Small Things" - a powerful tale of family and caste in southern India as seen through the eyes of two young children.

Since then, she has become a world-wide celebrity and her book a best-seller.

Ms Roy is a well-known campaigner against the dam project and has written a series of articles against the building of big dams.

But she remains coy about her role as a benefactor. The writer's agent says the best-selling author regularly gives money to charitable organisations.