Forget the Oscars, the biggest Indian winners of the Slumdog Millionaire fairytale are two of the film's child actors plucked from the shanty towns of Mumbai, after it emerged they are to be given "free homes" by the state government.

Azharuddin Mohammed Ismail, 10, and Rubina Ali Qureshi, nine, who play the lead characters in their younger years, currently live in shacks in the Garib Nagar slum in Bandra East, Mumbai. But Amarjit Singh Manhas, the chairman of the Maharashtra housing authority, told the Times of India: "We felt that since the children have made the nation proud, they must be given free houses."

There had been anger after pictures emerged of the child stars living in squalor despite the £10m movie earning about £69m since its north American release in November. Set in Mumbai, which is part of Maharashtra state, Slumdog Millionaire won eight awards at the Oscars on Monday, including best picture.

Danny Boyle, who won best director for the movie and cast the Hindi-speaking children from Mumbai's slums in the two lead roles, has repeatedly denied accusations he had exploited the children and not paid them enough. Film-makers pointed out that trust funds had been set up for the children and they had been sent to school.

The Mumbai board's decision has delighted the children's families, according to the Times of India. Azharrudin's father, Mohammed Ismail, told the newspaper: "We have barely got any money from the film-makers. In fact, whatever came, has already been spent. We do not even have a pucca wall in this shanty and our future is equally uncertain. In fact, this decision is definitely a piece of good news for us."

Another big winner from the movie appears to be Frieda Pinto, who a year ago was an unknown model in India struggling to break into Bollywood. But after the Oscars, she has been welcomed by Hollywood, securing a part in a new Woody Allen film alongside Anthony Hopkins and Naomi Watts.

Pinto, who in the US has been mistaken for a person of Hispanic descent (her family is from the former Portuguese colony of Goa, in south India), is now India's most highly paid actress.

Industry sources quoted by the Indian press say Pinto will get up to $3m (£2m) for the movie – small change in Hollywood but double the fee paid to Bollywood's most famous female faces.

She has also signed up with the Los Angeles-based Creative Artists Agency, the world's most powerful talent agency which represents such Hollywood royalty as Nicole Kidman and Bruce Willis.

But it has not been easy for the Indian star to break on to the global scene – the actress's break-up with her fiancé generated tabloid headlines across the world.