Controversy has riven the 40-year-old British Fantasy Awards, with the winner of the best novel prize handing her award back just three days after it was bestowed.

The awards have been administered by the British Fantasy Society since 1971, and this year's winners were announced on Sunday at FantasyCon in Brighton. But the organisation and presentation of the awards has been drawing criticism since then, culminating in Sam Stone, the winner of the best novel award – named after American writer and editor August Derleth – announcing yesterday that she is giving it back.

The biggest attack on the awards was delivered by editor and anthologist Stephen Jones, who on Tuesday posted a lengthy blog decrying the organisation of the BFAs and making several allegations against awards co-ordinator and British Fantasy Society chairman David Howe.

Jones said the awards were weighted towards the small presses rather than "mainstream" publishing, and said: "To put it bluntly, this year's results made a mockery of the British Fantasy Award and everything it has always stood for. Even if you ignore the embarrassing ceremony and clichéd platitudes, few of these awards actually reflected genuine quality or what is happening in mainstream genre publishing today."

Jones draws attention to the fact that several awards were given to books published by an imprint called Telos – which is co-run by the coordinator of the BFAs, David Howe. Jones said: "Without any proof, I'm not accusing anybody of doing anything underhand. But there is certainly a strong case for the BFS chairman to have removed himself from the entire process once it became apparent how many of his own titles and those of his partner were on the initial nomination list."

Howe's partner is Sam Stone, who won the August Derleth award for best novel for Demon Dance, published by speculative fiction publisher Murky Depths. Stone – the first woman to win the award since Tanith Lee in 1980 – responded to the furore yesterday on her own blog, saying that while the FantasyCon weekend was "one of the proudest moments of my life", she was giving back the award.

"I first appeared on the horror circuit in 2007 and attended my first FantasyCon that year," Stone wrote.

Since then I have always held the British Fantasy Awards in high regard and it was always my dream to one day win an award. This year I did win the award, for not only Best Short Fiction with my short story 'Fool's Gold', but also for my novel Demon Dance. I was delighted to be the first woman in 31 years to win this award and I had no idea that I had won either award. David – professional to the core – made a point of ensuring that I did not find out. I have seen the comments made concerning my receiving the August Derleth Award for Best novel on Sunday - I repeat again I had no knowledge I was going to receive it and remind everyone that the ballot is from the BFS membership and attendees of FantasyCon. It is their votes, not a Jury or an individual, that decide who wins the awards. I am absolutely devastated by the comments made and the last few days have been deeply distressing for me. I do not wish to be seen as the winner that tore the British Fantasy Society in two. The society means too much to me and I cannot allow this controversy to taint the integrity of those involved. Therefore, I am returning the award for Best Novel.

The BFS – which has posted videos of the awards ceremony on youTube – has not yet made a formal response to the allegations on its website.

Sarah Pinborough, who, as "Mistress of Ceremonies" for FantasyCon, presented the awards, said on Twitter following Stone's announcement: "The best novel award shouldn't be returned. It was won via the system. There are problems with the BFS and the system, but Sam should keep it."

Previous August Derleth winners include Neil Gaiman (2006), China Miéville (2001 and 2003), Stephen King and umpteen-times winners Ramsey Campbell and Michael Moorcock.