Daniel Day-Lewis and Tilda Swinton swept Britain to Oscar glory today while No Country For Old Men was the biggest film of the ceremony.
Day-Lewis, 50, as predicted, won his second best actor Academy Award for his towering performance as a ruthless, malevolent oilman in There Will Be Blood.
Swinton, 47, landed the best supporting actress gong for her role as a ruthless corporate lawyer in the George Clooney movie Michael Clayton.
The 80th Academy Awards named French actress Marion Cotillard as best actress for her role as singer Edith Piaf in the biopic La Vie en Rose.
The 32-year-old beat Julie Christie to the title just weeks after her surprise victory over the British veteran at the Baftas.
The film that dominated the night at Hollywood's Kodak Theatre was No Country For Old Men, the Coen brothers' violent neo-western.
It won four of its eight nominations, beating British film Atonement to best picture, and scooping best director.
It also took the prize for best supporting actor for Spanish actor Javier Bardem, and adapted screenplay.
London-born Swinton provided one of the most amusing speeches of the ceremony when she thanked her agent, but not in the usual fashion, saying as she held up her statuette: "I have an American agent who is the spitting image of this.
"Really, truly, the same shaped head and it has to be said the buttocks.
"I'm going to give this to him because there's no way I'd be in America, even on a plane, if it wasn't for him."
She also dedicated her award to Clooney, the film's producer and star, joking: "Seeing you climb into that rubber batsuit from Batman and Robin, the one with the nipples, every morning under your costume, on the set, off the set, hanging upside-down at lunch, you rock, man.
"Thank you, thank you, thank you."
Day-Lewis, who holds joint Irish and British citizenship, and received his first Oscar for My Left Foot in 1990, picked up his second Academy Award from Helen Mirren, recipient of last year's best actress gong.
"That's the closest I'll ever come to getting a knighthood, so thank you," he joked.
Perhaps drawing inspiration from his violent character Daniel Plainview in There Will Be Blood, he thanked "the members of the academy for whacking me with the handsomest bludgeon in town.
"I'm looking at this gorgeous thing you've given me and I'm thinking back to the first devilish whisper of an idea that came to him and everything since and it seems to me that this sprang like a golden sapling out of the mad, beautiful head of (director and writer) Paul Thomas Anderson," he said.
Cotillard was visibly shocked and moved to tears by her win and told the audience: "Thank you so much....I'm speechless... It is true there are some angels in this city."
Atonement, the film starring Keira Knightley and James McAvoy and adapted from the novel by Ian McEwan, only took one of its seven nominations, for best music (score).
But British names were rewarded in categories ranging from animated short-film to costume design.
The Coen brothers had been favourites for the best picture and director categories for their film, adapted from the novel by Cormac McCarthy.
Joel Coen said of the best director award: "We're really thrilled ... we're very thankful to all of you out there for letting us continue to play in our corner of the sandbox."
He added that their film-making today did not feel "that much different" to the films the brothers made as kids.
"When Ethan was 11 or 12, he got a suit and a briefcase and we went to the Minneapolis International Airport with a Super 8 camera and made a movie about shuttle diplomacy called Henry Kissinger, Man On The Go," he said.
No Country For Old Men, starring Tommy Lee Jones and about a drug deal that goes wrong and its bloody aftermath, has been described as one of the best films in the Coen brothers' career.
Their films over the years have included Fargo, Blood Simple and O Brother, Where Art Thou? but this was their first best picture and directing gong.
Unusually, the academy snubbed US stars in all the acting categories - awarding them to two Britons, a French actress and a Spanish actor.
Austrian film The Counterfeiters, a true story about the Nazi's counterfeiting operation, won the foreign language film category.
Director Stefan Ruzowitzky said: "There have been some great Austrian filmmakers working here, ... Billy Wilder, Fred Zinnemann, Otto Preminger, most of them had to leave my country because of the Nazis, so it makes sense that the first Austrian movie to win an Oscar is about the Nazis' crimes."
Peter And The Wolf, a half-hour adaptation of Prokofiev's classic directed by Briton Suzie Templeton, won best animated short film.
She thanked everyone who "worked so hard to make our dream come true" while British producer Hugh Welchman, who was clutching a small model of Peter, exclaimed: "This is a fairytale ending for us.
"But hopefully it's the beginning for Peter and this amazing award will keep Prokofiev's Peter and the Wolf in the hearts and minds of children all over the world."
Heavily pregnant Australian actress Cate Blanchett had been nominated for two awards, best actress for her performance in Elizabeth: The Golden Age, and supporting actress for her astonishing turn as Bob Dylan in I'm Not There, but left empty handed.
Other pregnant attendees included Nicole Kidman, who presented an award.
Cotillard became the first French woman to win the best actress Oscar in almost 50 years.
It is thought to be only the second time in Oscars' history that the award had gone to a performance in a non-English speaking role, the other winner being Sophia Loren.
As well as actor, supporting actress and animated short film, Britons won at least three other technical awards.
Spanish winner Bardem said of his best actor win: "Thank you to the Coens for being crazy enough to think that I could do this and for putting one of the most horrible haircuts in history on my head."
The Bourne Ultimatum, starring Matt Damon, won three prizes all in the technical categories.
It was 20 times unlucky for US sound mixer Kevin O'Connell, who been nominated for the 20th time, on this occasion for Transformers, but went away with nothing.
Juno, about a teenage girl who gets pregnant, won best original screenplay for US writer Diablo Cody, a former stripper and lapdancer.
Irish singer and guitarist Glen Hansard won best song for Falling Slowly, from the music-infused Irish film Once.
The nominations for best documentary short subject were announced by soldiers serving in Iraq.
The war was also referred to when Taxi To The Dark Side, about alleged acts of torture by the US in Iraq, Afghanistan and Guantanamo Bay, won best documentary feature.
Its US director and writer Alex Gibney said he had been inspired to make the film because of Guantanamo, Abu Ghraib, and extraordinary rendition.
"Let's hope we can turn this country around, move away from the dark side and back to the light," he said.
Comedian Jon Stewart hosted the show and joked about the crop of "Oscar-nominated psychopathic killer movies" in the running for big prizes.
"Does this town need a hug? What happened? No Country For Old Men? Sweeney Todd?, There Will Be Blood?
"All I can say is, 'thank God for teen pregnancy'," he said referring to the best picture nominee Juno.
The butt of his jokes included US presidential hopeful Hillary Clinton.
Julie Christie's film Away From Her, about a woman suffering from Alzheimer's, was the "moving story of a woman who forgets her own husband".
"Hillary Clinton called it the feelgood movie of the year," he joked.
Just days ago, the 80th Academy Awards looked as though they might not go ahead because of the writers' strike.
Today's presenters included Jack Nicholson, James McAvoy, Renee Zellweger, Penelope Cruz, John Travolta, Tom Hanks and Harrison Ford.
Heath Ledger, who died following an accidental overdose of prescription drugs at 28, was remembered in a montage of those in the film industry who have died in recent months.