Outsider Desai is youngest woman to win Man Booker

The Indian writer Kiran Desai last night became the youngest woman ever to take the £50,000 Man Booker Prize, proving victorious in the prestigious award for which her mother, Anita, has previously been shortlisted three times without success.

The 35-year-old author, who was a complete outsider when the shortlist was announced, beat the bookies' favourite, Sarah Waters, and the former Orange Prize winner Kate Grenville to win the award with The Inheritance of Loss, an ambitious novel of interwoven lives in the foothills of the Himalayas and among illegal immigrants in New York.

Taking the stage at the ceremony in London, Desai said she had not expected to win. As the only awards she had ever seen on television were the Oscars, she embarked on rounds of thanks including her parents, especially her mother who was visiting an uncle in a Tibetan refugee settlement with no telephone or television to hear the news. Anita Desai had originally advised her daughter against writing as a career.

"To my mother, I owe a debt so profound and so great that this book feels as much hers as it does mine," she said. "It was written... in her wisdom and kindness, in cold winters in her house when I was in pieces. I really owe her this book so enormously. A minute isn't enough to convey it."

But with extraordinary composure, she thanked all the other writers saying: "I know the best book does not win. The compromise wins."

Yet, any suggestion that it was a compromise choice was dismissed by Hermione Lee, the chair of the judges, who said there was "no ambiguity" unlike when she was a judge in 1981 when the comparatively unknown Salman Rushdie controversially beat DM Thomas's The White Hotel with Midnight's Children.

Professor Lee said of the winning novel: "It is a magnificent novel of humane breadth and wisdom, comic tenderness and powerful political acuteness. " The judges, who included The Independent critic Anthony Quinn and the actor Fiona Shaw, reached their decision in just under two hours "after a long, passionate and generous debate", Professor Lee said.

Kiran Desai was born in India, but came to Britain with her mother, Anita Desai, in her teens and then to America. She now lives mainly in New York but partly in New Delhi and admitted: "Given what the political climate has been in the States, I feel more and more Indian in so many ways."

Her first novel, Hullabaloo in the Guava Orchard, was well-received by critics, but she struggled to produce its successor. The Inheritance of Loss, which is dedicated to her mother, took eight years to write. "For all those years, nobody calls you," she said in an interview recently. That is certain to change. John Banville's poetic story, The Sea, last year's winner, has sold more than 250,000 copies and his publisher has reported a dramatic rise in sales of his published works. Desai admitted she had not started a third novel yet.

Rodney Troubridge of the booksellers Waterstone's compared Desai's novel to Booker-winning predecessors such as Arundhati Roy's The God of Small Things and Salman Rushdie's Midnight's Children. "This continues the fine tradition of Booker winners set in India," he said.

The other shortlisted novels were The Night Watch by Sarah Waters, a story set in war-time London; The Secret River by Kate Grenville, about a convict's new life in Australia; Carry Me Down by MJ Hyland, about a boy in a troubled family in Ireland who believes he can detect lies; In the Country of Men by Hisham Matar, a tale of life under Colonel Gaddafi in Libya; and Mother's Milk by Edward St Aubyn, a comedy of a dysfunctional wealthy family.

Ben Okri remains the youngest victor, winning in 1991 with The Famished Road.