Over the course of the contest, the audience learns how Jamal and his brother Salim are orphaned during Hindu-Muslim riots in the slum before they meet another orphan girl Latika, whom Jamal falls in love with.

The trio of children are unwittingly befriended by a gangster before they realise their mistake and attempt to escape. Latika however is caught and forced into child prostitution.

Jamal's life thereafter is a quest to be reunited with Latika, a journey which leads him to an appearance on Who Wants to be a Millionaire because he believes she will be watching, setting the scene for an uplifting finale.

While the film's message is upbeat, Boyle is not afraid to use his camera to depict the harsh reality of life in Mumbai, where great wealth often sits cheek-by-jowl with crushing poverty.

That willingness to confront social realism was the subject of apparent criticism by Bollywood legend Amitabh Bachchan, who wrote on his personal website recently that dire poverty exists in every culture, not just in India.

The comments were interpreted by the Indian media as a slight on Western directors and their perceptions of the country, although Bachchan has denied he was being critical of Boyle's success.

Boyle said he and screenplay writer Simon Beaufoy wanted to include "as much of the city as possible that we saw and found. And there are some tough things and there are some extraordinary things."

Boyle said while the global popularity of the Who Wants to be a Millionaire franchise had helped sell the film, it was the movie's "universality" that had hooked audiences.

"The quiz show obviously helps us in many ways it is so well known in so many different countries," Boyle said.

"But I think it's the universality of the story - it's the underdog, against all the odds, succeeding."

Indian composer A.R. Rahman's won two Oscars for best song and best score in his highest accolade yet in a career that has taken him from provincial Indian cinema to the Hollywood red carpet.

And the movie also scooped Oscars for best adapted screenplay, best cinematography, best sound mixing and best film editing.

Accepting the award for best picture, producer Christian Colson said late Sunday the film had been a collaboration by hundreds of people.

"Together we've been on an extraordinary journey. When we started out, we had no stars, we had no power or muscle," he said.

"We didn't have enough money, really, to do what we wanted to do. But what we had was a script that inspired mad love in everyone who read it."

Another Oscar for Sean Penn

Sean Penn won the best actor Oscar for his portrayal of a trailblazing gay politician in the biopic Milk and made an emotional plea for gay rights.

It was the 48-year-old's second best actor Academy Award following his win for the 2003 drama Mystic River.

"Thank you. Thank you. You commie, homo-loving sons-of-a-gun. I did not expect this," Penn told the awards ceremony.

And in a nod to his bad boy past he added: "I wanted to be very clear that I do know how hard I make it to appreciate me often."

He also made a plea for those who have voted against gay marriage to rethink their positions.

"I think that it is a good time for those who voted for the ban against gay marriage to sit and reflect and anticipate their great shame and the shame in their grandchildren's eyes if they continue that way of support. We've got to have equal rights for everyone," Penn said.

Other nominees for best actor included Mickey Rourke for The Wrestler, Richard Jenkins for The Visitor, Frank Langella for Frost/Nixon and Brad Pitt for The Curious Case of Benjamin Button.

Kate Winslet wins Best Actress

British star Kate Winslet made it sixth time lucky at the Oscars, capping her childhood dreams of winning the best actress statuette after five previous Academy nominations ended in defeat.

Winslet, 33, won for her haunting performance in The Reader as a former Nazi death camp guard who starts a love affair with a teenage boy in post-war Germany who is later put on trial for war crimes.

Winslet admitted she had been dreaming of Oscars gold for a very long time.

"I'd be lying if I haven't made a version of this speech before. I think I was probably eight years old and staring into the bathroom mirror and this would have been a shampoo bottle," she told the glittering audience at the 81st Academy Awards ceremony.

"It's not a shampoo bottle now," Winslet quipped. "I feel very fortunate to have made it all the way from there to here and I'd like to thank some of the people along the way who had faith in me."

She also called on her father to whistle from the audience so she could see him in the crowd, which he obliging did, drawing laughter and applause.

Other nominees for the Oscar included Meryl Streep for Doubt, Anne Hathaway for Rachel Getting Married, Angelina Jolie for Changeling, and Melissa Leo for Frozen River.

Winslet paid tribute to her fellow nominees "these goddesses."

"I can't believe we're in a category with Meryl Streep at all," Winslet said. "I'm sorry, Meryl, but you have to just suck that up."

Danny Boyle wins Best Director

Danny Boyle won the best director Oscar for his rags-to-riches drama Slumdog Millionaire.

The 52-year-old is one of British cinema's most influential film-makers, having previously directed a string of low-budget cult classics including Trainspotting, Shallow Grave and 28 Days Later.

He beat out David Fincher (The Curious Case of Benjamin Button), Stephen Daldry (The Reader), Gus Van Sant (Milk) and Ron Howard (Frost/Nixon).

Heath Ledger wins supporting Oscar

Heath Ledger's family delivered an emotional acceptance speech after he was named winner of the best supporting actor Oscar for his stunning performance as The Joker in the Batman blockbuster, The Dark Knight.

Ledger's father, Kim, mother Sally Bell, and sister Kate all spoke passionately about the late actor.

"First of all, I have to say this is so humbling," Kim Ledger told the audience.

Sally described her son as a "generous soul" and said the family would celebrate his life tonight.

Kate confirmed the Oscar would go to her brother's daughter, three-year-old Matilda.

"We proudly accept this award on behalf of your beautiful Matilda," Kate said.

Perth-born Ledger, who died from an accidental prescription drug overdose aged 28 exactly 13 months ago, becomes only the second actor to win an Academy Award posthumously.

Ironically, the other was also an Australian, Peter Finch, for Network in 1977.

Finch died from a heart attack in the lobby of the Los Angeles' Beverly-Wilshire Hotel two months before the ceremony.

The Academy has ruled Ledger's daughter will receive the Oscar.

Earlier, two other Australians, costume designer Catherine Martin for Australia and art director Michael Carlin for The Duchess, missed out on Oscars.

Cruz wins best supporting actress

Penelope Cruz created a piece of Hollywood history after becoming the first Spanish actress to win an Oscar for her performance in the Woody Allen comedy Vicky Cristina Barcelona.

The 34-year-old's victory in the supporting actress category represented a glittering recognition of an acting talent that has seen her appear in two Oscar-winning foreign language movies.

However, it was her scene-stealing performance as Maria Elena, the neurotic wife of an artist, in Allen's steamy Barcelona-set comedy that finally saw her strike Oscars gold.

"Has anybody ever fainted here? Because I might be the first one," an overwhelmed Cruz said as she accepted her award.

"Thank you so much to the academy. I want to share this with my fellow nominees. And with the amazing ensemble of actors that I had the privilege to work with in this movie. Thank you for trusting me with this beautiful character."

Other nominees included Viola Davis for Doubt, Marisa Tomei for The Wrestler, Taraji P. Henson for The Curious Case of Benjamin Button and Amy Adams for Doubt.

Born in Madrid in 1974, Cruz appeared destined for a career in the entertainment industry almost as soon as she could walk. As a child she entertained family members by mimicking popular television commercials.

Her initial creative outlet was dancing however, and she was soon enrolled at Spain's National Conservatory where she studied classical ballet for nine years. At 15 however, she was nudged towards acting after beating 300 other girls to win a contract.

That led to a string of roles in Spanish television shows as well as music videos, and before long she was acting in full-fledged feature films.

Her breakthrough performance came in Spanish director Bigas Luna's Jamon, Jamon in 1992, which received critical acclaim and was notable for its erotic scenes featuring a 16-year-old Cruz and Javier Bardem.

That was followed soon afterwards by Belle Epoque, which went on to win the Oscar for best foreign film, Cruz playing the role of one of four sisters vying for the love of an army deserter.

The next major milestone in Cruz's career however came in 1997, when she was cast in her first film by Pedro Almodovar.

Live Flesh marked the beginning of a decade-long collaboration between Almodovar and the actress which has included roles in another foreign language Oscar-winner, 1999's All About My Mother, and Volver.

"Working for Pedro was my dream, I was obsessed with him," Cruz said. "My biggest dream ever was receiving his telephone call."

While Cruz has achieved critical success in Spanish-language films, she has found it harder to establish herself in mainstream Hollywood.

She achieved a rare but unwanted feat in 2001 when she received three nominations in the Golden Raspberries Oscars spoof, which salute the film world's "worst of the worst", in a single year.

Cruz earned Razzies for Captain Corelli's Mandolin, Blow, and Vanilla Sky, a film which saw her star opposite Tom Cruise, who was to become her boyfriend for three years.

Cruz has yet to score a genuine box-office hit in English, with recent flops including Gothika and Sahara.

However, she reminded everyone of her talents - and picked up an Oscar nomination to boot - with 2006's Volver.

The fiercely independent Cruz, who has been romantically linked to compatriot and "Jamon Jamon" co-star Bardem, is also wary of being type-cast simply for her striking physical beauty.

"The most difficult thing in the world is to start a career known only for your looks, and then to try to become a serious actress," she says. "No one will take you seriously once you are known as the pretty woman."

Full list of Oscar winners

Oscars Winners (Factbox)

1. Best Picture: Slumdog Millionaire.

2. Best Actor: Sean Penn, Milk

3. Best Actress: Kate Winslet, The Reader.

4. Supporting Actor: Heath Ledger, The Dark Knight

5. Supporting Actress: Penelope Cruz, Vicky Cristina Barcelona;

6. Director: Danny Boyle, Slumdog Millionaire.

7. Foreign Film: Departures, Japan

8. Adapted Screenplay: Simon Beaufoy, Slumdog Millionaire.

9. Original Screenplay: Dustin Lance Black, Milk.

10. Animated Feature Film: WALL-E.

11. Art Direction: The Curious Case of Benjamin Button

12. Cinematography: Slumdog Millionaire

13. Sound Mixing: Slumdog Millionaire

14. Sound Editing: The Dark Knight

15. Original Score: Slumdog Millionaire, A.R. Rahman

16. Original Song: Jai Ho from Slumdog Millionaire, A.R. Rahman and Gulzar

17. Costume: The Duchess

18. Documentary Feature: Man on Wire

19. Documentary (short subject): Smile Pinki

20. Film Editing: Slumdog Millionaire.

21. Makeup: The Curious Case of Benjamin Button

22. Animated Short Film: La Maison en Petits Cubes

23. Live Action Short Film: Spielzeugland (Toyland).

24. Visual Effects: The Curious Case of Benjamin Button

AFP