The EU has won the Nobel Peace Prize for its long-term role in uniting the continent, as the bloc faces its greatest internal crisis since it was established in the 1950s.
The 27-nation group was praised for rebuilding Europe (Chicago Options: ^REURUSD - news) after World War II and for its role in spreading stability to former communist countries after the 1989 fall of the Berlin Wall.
Committee chairman Thorbjoern Jagland said it had been crucial in the transformation of a "once torn Europe from a continent of wars to a continent of peace".
"Over a seventy-year period, Germany and France had fought three wars. Today war between Germany and France is unthinkable," he said in Oslo."
"This shows how, through well-aimed efforts and by building up mutual confidence, historical enemies can become close partners."
He added: "This is a message to Europe to do everything they can to secure what they've achieved and move forward," he said, saying it was a reminder of what would be lost "if the union is allowed to collapse".
European Commission president Jose Manuel Barroso said on Twitter: "It is a great honour for the whole of the EU, all 500 million citizens."
But the award has sparked controversy, coming at a time when the EU is battling to solve the eurozone crisis and bridge deep rifts between a south drowning in debt and a wealthier north.
It will also spark surprise in host country Norway, which itself has rejected joining the union twice, in 1972 and 1994. Three-quarters of Norwegians say they are opposed to EU membership, according to recent polls.
Sky's foreign affairs editor Tim Marshall said that while the EU was "one of the great success stories of humanity", there would be many critics of its receipt of the award.
"The European Union is overseeing an economic crisis partially of its own making of the euro where it basically either forged figures, or turned a blind eye to knowing figures were forged to allow countries into the euro, which has helped create the economic crisis which is threatening stability," he said.
"Yugoslavia was a signal defeat for Europe's peace-making ability. Total (Brussels: FP.BR - news) failure. Also, Norway isn't even in the European Union. Its (Euronext: ALITS.NX - news) people, from whom the committee are drawn, has decided they don’t want anything to do with it."
The EU won from a field of 231 candidates including Russian dissidents and religious leaders working for Muslim-Christian reconciliation.
It was picked out by a five-member committee appointed by the Norwegian parliament, where parties are deeply split over EU membership. Mr Jagland has long favoured joining.
A prize, worth £750,000, will be presented in Oslo on December 10.
Politicians in Germany, one of the main forces behind the foundation of the EU, were delighted with the award but the British government - less wedded to the European ideal - has made no comment.
Shadow Chancellor Ed Balls remarked: "They'll be cheering in Athens tonight, won't they?"
Some Greeks weary of years of austerity and crisis were certainly unhappy on hearing the news. "Is this a joke?" asked Chrisoula Panagiotidi, 36, a beautician who lost her job three days ago.
"It's the last thing I would expect. It mocks us and what we are going through right now. All it will do is infuriate people here."
And in Madrid, businessman Francisco Gonzalez, 62, was baffled. "I don't see the logic in the EU getting this prize right now. They can't even agree among themselves," he said.
Former Chancellor Lord Lamont said: "The decision to award the Nobel Peace Prize to the EU at a time when people in the streets of Athens are dressing up as Nazis seems preposterous and absurd.
"If the committee cannot think of an individual to whom they should award the prize, better not to give one at all."
Despite recurring difficulties, the EU has become the biggest common market in the world, allowing free circulation of goods, people, services and capital.
And after centuries of war on the continent, Europe has been at peace within its borders, although its effort to stop war in former Yugoslavia - hailed by one minister as "the hour of Europe" - was a failure.
The EU traces its origins back to the 1950s when six countries, Belgium, France, Germany, Italy, Luxembourg and the Netherlands, joined forces in the European Coal and Steel Community (ECSC (Taiwan OTC: 4749.TWO - news) ) and the European Economic Community (EEC).
It has grown in size over the years, reaching 15 members in 2004 when it embraced the first of the former Soviet states stranded for half a century behind the Iron Curtain. There are currently 27 member states.
The EU is the first organisation, rather than individual or group of individuals, to be awarded the prize, since Medecins Sans Frontieres in 1999.
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