The film features a number of unknown actors who live in one of Mumbai's slums, two of whom attended the awards ceremony.

Slum-dwellers 'proud'

Matt McClure, reporting from the Behrampada slum that is home to two of the lead actors, said people were "huddled around television sets in this neighbourhood".

"It is a very proud moment ... here that two locals ... are at the Oscars and walking the red carpet with the rest of the stars," he said.

Slumdog Millionaire

 Focus: Seeking a way out
 Video: Film's mixed reviews
 Video: Stuck in the slums

Slumgdog Millionaire is about a poverty-stricken slum-dweller who competes for love and money on the Indian version of the television gameshow Who Wants to be a Millionaire?.

It follows the fortunes of three orphaned children as they navigate the harsh realities of life for Mumbai's poorest residents.

While celebrating being the focus of attention following Slumdog Millionaires' Oscar success, McClure reported that locals were "realistic about it and don't think life is going to change and that things will go back to normal".

Other award winners included Penelope Cruz, Heath Ledger, the late Australian actor, and British actress Kate Winslet. 

Winslet's first Oscar

Winslet, 33, won her first Oscar for her role as a German woman with a secret Nazi past in the drama The Reader.

The Titantic star had been nominated for an award five times during the past 13 years before finally picking up the Oscar for best actress this year.

"I'd be lying if I said 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. Well, it's not a shampoo bottle now," she said.

Heath Ledger became the second actor ever to receive a posthumous academy award
Cruz, 34, became the first Spanish-born actress to pick up the best supporting actress award for her performance as artist Maria Elena in American director Woody Allen's romantic comedy Vicky Cristina Barcelona.

"Thank you Woody for trusting me with this beautiful character. Thank you for having written over all these years some of the greatest characters for women,"  Cruz said as she accepted the Oscar.

 
 
Ledger was named best supporting actor for his performance as the Joker in the Batman film The Dark Knight.

The Australian actor, who died aged 28 of an accidental medicine overdose last year, is only the second actor to receive an Oscar posthumously.

Ledger's father, Kim, accepted the Oscar on his son's behalf on Sunday night with the actor's mother, Sally Bell, and sister, Kate Ledger.

He was previously nominated for an Oscar for his 2005 performance as a gay cowboy in the film Brokeback Mountain, although he did not win the award.

The actor's Oscar will eventually go to his three-year-old daughter, Matilda Ledger, by his former fiancee, actress Michelle Williams.

The Academy of Motion Picture Arts and Sciences decided Matilda should receive the Oscar when she turns 18.