China's leading dissident has been awarded the Nobel peace prize. The Guardian's Tania Branigan reports from Beijing, where police have cordoned off Liu's wife house guardian.co.uk

China's best-known dissident, Liu Xiaobo, today won the Nobel peace prize from the prison cell where he is serving 11 years for incitement to subvert state power.

The announcement provoked a furious reaction from Chinese authorities, who warned that the decision would hurt relations with Norway.

"Liu Xiaobo is a criminal who has been sentenced by Chinese judicial departments for violating Chinese law," the foreign ministry said in a statement.

Awarding the peace prize to Liu "runs completely counter to the principle of the prize and is also a blasphemy to the peace prize", the statement said.

Announcing the prize, the Norwegian Nobel committee praised Liu Xiaobo for his "long and non-violent struggle for fundamental human rights in China. The … committee has long believed that there is a close connection between human rights and peace."

Liu was detained at his Beijing home in December 2008 after co-authoring Charter 08, a call for democratic reforms in China.

Nobel committee chairman Thorbjørn Jagland said China should expect to be put under greater scrutiny as it becomes more powerful: "We have to speak when others cannot speak. As China is rising, we should have the right to criticise … we want to advance those forces that want China to become more democratic."

As the news was announced, transmission of both BBC news and CNN television channels was interrupted in China.

The Chinese foreign ministry repeated earlier warnings that awarding the prize to Liu would damage Sino-Norwegian relations. It gave no details.

Xu Youyu, a signatory of Charter 08, said the prize was compensation for the "enormous sacrifice" Liu had made in pursuit of democracy and human rights in China.

He added: "Liu Xiaobo is not the only one who is fighting. Behind him, there are many people who are devoting their efforts. Therefore it is not a prize for himself but also for the group of people who are fighting. Thousands of people who are suffering will be inspired by this news.

"This prize means the Chinese people's pursuit of values such as peace, freedom and democracy has been recognized. I believe people's non-violent fight will conquer more difficulties in the future, and I feel more confident about China having a bright future."

Liao Yiwu, a fellow writer who has know Liu for more than 20 years, said today: "As Liu's best friend, I am so happy I can't describe what I feel. This is a big moment in Chinese history. It will greatly promote democratic developments in China and it is a huge encouragement to us and our friends."

He said the prize was a great reward not only for the author, but for his wife Liu Xia, who had supported Liu throughout his repeated jailings, despite coming under intense pressure from the Chinese authorities.

The Dalai Lama said the award represented international recognition for the efforts of Chinese democracy activists, and called on China to release Liu and others "imprisoned for exercising their freedom of expression".

In a statement on his website, the exiled Tibetan spiritual leader and Nobel laureate said: "I believe in the years ahead, future generations of Chinese will be able to enjoy the fruits of the efforts that the current Chinese citizens are making towards responsible governance."

Czech playwright and former president Václav Havel and Nobel peace laureate Desmond Tutu were among those who had supported Liu for his "unflinching and peaceful advocacy for reform".

Liu was first jailed for his role in the Tiananmen Square student reform movement. He also served three years in a labour camp in the 90s.

"There was never a question for him of abandoning the struggle, although he was very critical about the [1989 student] movement," said Jean-Philippe Béja, of the Paris-based Centre for International Studies and Research, who first met Liu in the early 90s.

"He is a person who wants to live in truth."

It is highly unlikely that the 54-year-old author and former academic knows he has won. His lawyer told him his name had been put forward, but it is thought he knows little about the nomination because he is not permitted to talk about current affairs with visitors to his prison in Jinzhou, Liaoning province. He is allowed to see his relatives for an hour each month. His wife, Liu Xia, had said she believed he was unlikely to win the prize, but that she thought the attention he gained had won him better conditions in prison.

Several Chinese dissidents took the bold step of signing a letter supporting his nomination.

In an article backing him for the prize, the philosopher Xu Youyu wrote: "His activities in 1989 can be seen as formative in the entirety of his following writings and other works, characterised by an unwavering bravery and refusal to back down in the face of danger and suppression, by the pursuit and defence of human rights, humanism, peace and other universal values and, finally, adherence to the practice of rational dialogue, compromise and non-violence."