James Kelman yesterday won one of the most prestigious prizes in Scottish literature, the Saltire Society's Book of the Year award.

Kelman took the award for his latest novel, Kieron Smith, Boy, and picked up the £5000 prize at the National Library of Scotland in Edinburgh.

Winners of other categories in the 27th year of the awards include Andrew Nicoll's The Good Mayor, which took the First Book prize, and Ian Duncan who won the NLS Research Prize for Scott's Shadow. The history award went to Alex Woolf for From Pictland to Alba.

At the awards presentation ceremony, two of Scottish culture's most senior figures were honoured for their contribution to art and literature.The artist Dame Elizabeth Blackadder, and Dr Joy Hendry, editor of Chapman Magazine, received honorary membership of the Saltire Society from its president, Lord Cullen.

Previous winners of the Saltire Society's Book of the Year include Alasdair Gray, Muriel Spark and Sorley MacLean.

Kelman, who won the Booker Prize for How Late It Was, How Late, said he was glad to win because he had always wanted his writing to be viewed within the context of Scottish literary and intellectual thought.

He said that particularly applies to the work of Robert Burns, who will be celebrated next year in the Year of Homecoming.

"It is important that what we value so much is seen in its proper context, and sometimes writers in Scotland are very much not seen in this proper context," he said.

"That point I have often tried to make, of reconciling the external world and the internal world, that is very much a part of the intellectual tradition of Scotland.

"Perhaps it is time we stopped the pathetic ways of looking at Scottish writing, like looking at Burns as if from a external viewpoint, as if he is not part of Scotland."

At the awards presentation, Culture Minister Linda Fabiani revealed that next year the awards would get an extra £25,000 sponsorship as part of the Year of Homecoming.

There will be a new literary prize as part of the package, called the Homecoming Award.

The minister said: "This reflects one of the main themes of next year's Homecoming, celebrating the 250th anniversary of the birth of Scotland's national poet, Robert Burns.

"The Year of Homecoming will provide a unique opportunity for visitors to join in the celebration of all the great things Scotland has given to the world, and so it's appropriate that for 2009 a special Homecoming award is being created that will enhance the profile of Scottish literature around the world."

Cunison Rankin, chair of the Saltire Society, said: "The Saltire awards are very much valued by authors and their publishers and winning an award from Saltire is widely recognised as a mark of excellence in authorship, expanding the horizons of the awards to the Scottish global community and playing a full part in the Year of Homecoming is an opportunity which the Saltire Society welcomes."