Ugrešić, 67, is a literary historian and a sharp and lucid writer of novels and essays, in which she interweaves public and private, East and West and politics and cultures.

In 1993, the author left her homeland because of her critique of the nationalistic sentiment in Croatia and now lives in Amsterdam. As she puts it, she "exists in an inter-space and lives in no man's land", head of the Vilenica jury Lidija Dimkovska told the press in Ljubljana on Wednesday.

Ugrešić for instance analysed the disintegration of the former Yugoslavia from different angles in The Culture of Lies (1998) collection of anti-political essays and wrote about how a lie becomes the supreme truth in Thank You for Not Reading (2003).

"Author Ugrešić never turns a blind eye to anything," the prize jury wrote as it explanated why to award her.

"In the last few collections of essays, she most certainly does not turn a blind eye to the universal standardisation of culture and different tastes, to growing stupidity, to blind and uncritical acceptance of patterns of behaviour and thinking, to replication and second-ratedness, to manipulating," it added.

The festival will this year put in the focus Slovenian lesbian writer Suzana Tratnik, which according to the Vilenica festival co-founder Veno Taufer rounds up the dissident nature of the festival.

Tratnik has written short stories and novels, as well as a picture book, a radio play and various works on lesbian movement in Slovenia and lesbian literature. She received the Prešeren Fund Prize in 2007 for her book Vzporednice (Parallels).

Taufer said he was happy that Vilenica's idea would be spread by two "extremely dissident authors". "Ugrešić has always, as a symbol of her literature at the topmost aesthetic level, fought nationalisms of all kinds, while Tratnik's literature is socially rebellious."

The accolade, which comes with a EUR 10,000 prize, has been given out by the Slovenian Writers' Association as part of the festival since its inauguration in 1986. Among the recipients of the prize are the likes of Ana Blandiana, Olga Tokarczuk, Ilma Rakusa, Peter Handke, Peter Esterhazy and Milan Kundera.

The festival, which has reached its fourth decade, will focus on Literature and Ethics in the coming four years. The topic will also be highlighted at this year's Central European Initiative's panel and the International Comparative Literature Colloquium during the festival, running between 6 and 11 September.

Despite its age, Vilenica keeps running in excellent condition and remains enticing, head of the Writers' Association Ivo Svetina stressed. "As long as we have literature and the international Vilenica festival we need not fear losing our human dignity and the value the literature generates."

Over 20 languages will be heard at the festival that will host more than 25 authors from Europe and elsewhere. Among them the festival jury will pick the winner of the Crystal of Vilenica award.

The participating authors will read their worls at literary evenings around Slovenia, including in Ljubljana, Sežana, Lipica, Maribor, Celje, Koper, Lokev and, last but not least, in the Vilenica Cave, where Ugrešić will receive the main prize.

As is tradition, Vilenica will pay tribute to an overlooked literature, this year turning to Latvia. The festival will host four Latvian writers and an anthology, entitled Dzeja, featuring 14 authors from the country was published to accompany the festival.