The former Beatle was given a fellowship by the British Academy of Composers and Songwriters (BASC) at the awards, which also saw two prizes for Scottish band Travis.
Singer Fran Healy collected the songwriter of the year award, and also picked up the best contemporary song prize for Why Does It Always Rain On Me?
Sir Paul received a minute-long standing ovation after being called "an exemplary role model for young people the world over" by BASC chairman Guy Fletcher.
After picking up the award, he said: "I remember coming here the very first time with my mates John, George and Ringo and sitting back there.
"It was just fantastic to be part of this whole song writing thing. It was always just the greatest award, the greatest thing to get for song writers and it still is many years later."
Sir Paul's song Yesterday is the most-recorded track of all time.
Fran Healy thanked fellow band members Neil Primrose, Andy Dunlop and Dougie Payne, adding: "We've been together for 10 years, it's a long time, and it's been rubbish most of the time.
"When it's rubbish, the ones that prop you up are your best friends and I'm lucky to be in a band with them."
Travis' The Man Who album was 1999's best selling album by a British act, and is out-selling its rivals this year as well.
The Pet Shop Boys won an award for their outstanding contribution to British music during their 15-year career.
Sir Elton John presented the award, and won one himself for his contribution to The Lion King stage show, which won an award for international achievement in musical theatre.
Robbie Williams won the award for the best song musically and lyrically for Strong, which was collected by his co-writer, Guy Chambers.
Reformed London band Madness were rewarded for their outstanding song collection.
Guests at London's Grosvenor House Hotel included Sir Paul, Lulu, and funk legend Bootsy Collins.
Click here to see a full list of winners.