The Booker Prize winner Penelope Lively is made a Dame, with artists, musicians and members of the fashion industry also honoured.
Lively, 78, is recognised for services to literature. Her first successful book was Astercote, written for children in 1970. She published her first novel for adults, The Road To Lichfield, seven years later. It was the first of three works shortlisted for the Booker Prize. She won in 1987 for Moon Tiger, the story of a dying woman looking back over her life. Lively was appointed OBE in 1989, and created CBE 12 years later.
Lady Rachel Billington, who started writing in 1968 and is the author of 24 novels, is appointed OBE for services to literature. She is the daughter of the prisons reform campaigner Lord Longford and one of seven brothers and sisters who include the writers Lady Antonia Fraser and Thomas Pakenham.
The conductor and music director of the Royal Opera House, Antonio Pappano, is knighted for his services to music. He was appointed to the role in 2002, and has received a series of honours since, including the Olivier Award for Outstanding Achievement in Opera in 2003.
Also honoured for services to music is the rock producer Steve Lillywhite, who has worked with U2, Peter Gabriel, Talking Heads, The Rolling Stones, Morrissey and, more recently, Liam Gallagher's new band Beady Eye. Lillywhite, 55, is appointed CBE.
In the visual arts world, the two founders of the Frieze Art Fair, Amanda Sharp and Matthew Slotover, are appointed OBEs. The event, which was set up in 2003, is held every October in London's Regent's Park to showcase and sell contemporary art.
The founder of the fashion store Biba, Barbara Hulanicki, is also created OBE. The former illustrator opened Biba in London in 1964 and it quickly became a hangout for artists and musicians. It closed in 1976 and Ms Hulanicki now runs an interior design business.
New Year Honours List 2012:
* Knights Bachelor
* Order of the Bath
* Royal Victorian Order, Royal Victorian Medal, and Colonial Police and Fire Service Medal
* Order of the British Empire, Civil - GBE, DBE, CBE
* Order of the British Empire, Civil - OBE
* Order of the British Empire, Civil - MBE
* Diplomatic Services and Overseas List
* Military Division