For 50 years Bernardine Bishop worked as a teacher and psychotherapist before cancer forced her retirement and helped prompt a late-life decision to return to writing. On Tuesday night, one of three novels that she wrote with a blaze of energy before her death in July was shortlisted for one of the UK's leading literary awards.

Bishop was posthumously nominated in the novel category of the 2013 Costa awards for Unexpected Lessons in Love – part of an all-female shortlist that also includes Kate Atkinson, Maggie O'Farrell and Evie Wyld. "It is wonderful and also very sad because Bernadine's not here to enjoy it," said her editor, Kate Parkin. "I wish she had been."

Bishop wrote two novels when she was in her early 20s and before that found a degree of fame as the youngest witness in the Lady Chatterley trial in 1960, giving testimony along the lines of yes she had read DH Lawrence's book and no she was not corrupted by it.

Cancer forced her retirement from her successful career as a psychotherapist but it was being given the all-clear by her oncologist that really spurred her to take up writing again. "She completed three novels in the most extraordinarily short order," said Parkin. "There was an energy there that she tapped into … out it poured."

Unexpected Lessons in Love centres on two women who become friends, both diagnosed with cancer, but it is a book that readers will feel better for reading, said Parkin. "It is a novel of someone who is completely on top of their game; I think it is an extraordinary achievement."

Bishop's next two novels will be published in 2014 and 2015 and the judges for the Costa prize praised Unexpected Lessons in Love as "an unflinching, darkly funny story of love, obsession and illness that is unexpected in every way".

Although it is obviously unusual, Bishop is not the first to be posthumously nominated for the Costa awards, joining excellent company including Ted Hughes, who won book of the year for Birthday Letters in 1998 and Simon Gray, shortlisted in 2009 for his post-Smoking Diaries memoir, Coda.

The Costa book awards reward enjoyability by writers based in the UK and Ireland. There are five categories – novel, first novel, biography, poetry and children's book – and winners of each section will be announced in January. Each of those then vies for the overall £30,000 book of the year prize.

Up against Bishop's novel are Life After Life by Atkinson, who won the overall prize back in 1995 with Behind the Scenes at the Museum, when the prize was called the Whitbread; Instructions for a Heatwave, by O'Farrell; and All the Birds, Singing, by Wyld.

In poetry, Clive James is shortlisted for his translation of Dante's The Divine Comedy, a consuming project on which he worked for decades. He is joined on the shortlist by Helen Mort, Robin Robertson and Michael Symmons Roberts.

The biography section is diverse, taking in penguins, Auschwitz, alcoholic writers and one of the most repellent poets in history. Gavin Francis, a GP, followed penguins for more than a year as a research station doctor on the Caird Coast of Antarctica and is shortlisted for the resulting book. The others are Thomas Harding's double biography of Rudolf Höss, the commandant of Auschwitz, and Hanns Alexander, the German Jew who tracked him down; Olivia Laing's examination of why great writers such as Fitzgerald and Hemingway were also such prodigious drinkers; and Lucy Hughes-Hallett's biography of the poet turned unhinged fascist leader Gabriele D'Annunzio, a book that last month won the Samuel Johnson prize for non-fiction.

The children's section includes two debut writers in the form of former pig farmer and now teacher Ross Montgomery, for Alex, the Dog and the Unopenable Door, and Sarah Naughton for The Hanged Man Rises. The list is completed by Rose Under Fire by Elizabeth Wein, and Goth Girl: and the Ghost of a Mouse by Chris Riddell.

The first novel award will be contested by Sam Byers for Idiopathy, Kate Clanchy for Meeting the English, The Shock of the Fall by Nathan Filer, a registered mental health nurse, and Sathnam Sanghera for Marriage Material.

The shortlists

Novel award

Kate Atkinson, Life After Life

Bernardine Bishop, Unexpected Lessons in Love

Maggie O'Farrell, Instructions for a Heatwave

Evie Wyld, All the Birds, Singing

First novel award

Sam Byers, Idiopathy

Kate Clanchy, Meeting the English

Nathan Filer, The Shock of the Fall

Sathnam Sanghera, Marriage Material

Biography award

Gavin Francis, Empire Antarctica: Ice, Silence & Emperor Penguins

Thomas Harding, Hanns and Rudolf: The German Jew and the Hunt for the Kommandant of Auschwitz

Lucy Hughes-Hallett, The Pike: Gabriele D'Annunzio, Poet, Seducer and Preacher of War

Olivia Laing, The Trip to Echo Spring: Why Writers Drink

Poetry award

Clive James, Dante, The Divine Comedy

Helen Mort, Division Street

Robin Robertson, Hill of Doors

Michael Symmons Roberts, Drysalter

Children's book award

Ross Montgomery, Alex, the Dog and the Unopenable Door

Sarah Naughton, The Hanged Man Rises

Chris Riddell, Goth Girl and the Ghost of a Mouse

Elizabeth Wein, Rose Under Fire