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Authors Richard Flanagan and Steven Carroll were last night named joint winners of the Prime Minister's Literary Award for fiction at a ceremony in Melbourne.

On accepting the award, Flanagan – whose book, The Narrow Road to the Deep North, won this year's Man Booker Prize - said he would give away his $40,000 prize to the Indigenous Literacy Foundation.

The book is about a prisoner of war working on the Thai-Burma railway and has generated critical acclaim around the world.

Mr Flanagan said he would use the prize money to help the disadvantaged.

"The lesson that my father took from the POW camps was that the measure of any civilised society was its willingness to look after its weakest," he said.

"Money is like shit, my father used say. Pile it up and it stinks. Spread it around and you can grow things."

He said he hoped it would go some way to helping Indigenous children in remote communities.

"If just one of those children in turn becomes a writer, if just one brings to Australia and to the world an idea of the universe that arises out of that glorious lineage of 60,000 years of Australian civilisation, then I will think this prize has rewarded not just me, but us all," he said.

Flanagan’s generosity was matched by that of Bob Graham, winner of the Children's Fiction Award, who said he would donate his winnings to asylum seekers.

"I like to think that after the book is closed that he will grow into a man who will have empathy and understanding and compassion for what he sees out there," Mr Graham said of his character.

"And it's in this spirit that I would like to donate $10,000 to the Asylum Seeker Resource Centre here in Melbourne."

This year marked the first time in the Awards' seven-year history that the fiction prize was awarded to two winners.

There were nine winners across six categories spanning poetry, fiction and non-fiction.