The Dylan Thomas Prize which recognises writers under 30 is to be handed out annually, organisers have announced.
Launched in 2004 and first awarded in 2006 its £60,000 cheque was one of the largest literary prizes in the world.
From 2010 £30,000 will be awarded each year to a young writer of a novel, play, poetry or travel book.
In other changes designed to raise its profile, actress Kate Burton, daughter of Richard, and actor Michael Sheen, have been made patrons of the award.
They join Lord Griffiths of Fforestfach in helping to promote the prize at high-profile events.
The prize's official title sponsor of 2008 - the University of Wales - has also announced its continuing involvement to 2012.
It was won by Welsh writer Rachel Trezise in 2006 and Nam Le, originally from Vietnam, in 2008.
Chairman of the prize, Peter Stead, said: "It was always the intention that this award should become embedded in the international literary calendar.
"From its annual platform, the prize can work even harder to encourage, support and nurture talent in young writers worldwide.
"Success to date has given us the confidence to take the next logical step by making the prize an annual event from 2010."
Marc Clement, vice chancellor of the University of Wales, said the event was establishing itself as one of Wales' great cultural assets.
"The education programme we organised for the 2008 prize was a great success, stimulating young people's appreciation of literature and inspiring their creative writing talents," he added.
"We are keen to develop this programme on an even larger scale as our involvement with the prize continues."