The Nobel Peace Prize for 2006 was awarded to Muhammad Yunus, the 66-year-old Bangladeshi behind the Grameen Movement micro-banking system that has helped millions in his homeland, it was announced Friday in Oslo.

The Grameen Bank, which means 'rural bank' in Bengali, was also given the award worth 10 million kronor ($1.37 million), jointly.

The five-member Norwegian Nobel Committee cited Yunus and Grameen Bank 'for their efforts to create economic and social development from below'.

The committee underlined that 'lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty. Microcredit is one such means. Development from below also serves to advance democracy and human rights'.

The bank was created in 1976, and has focused on offering credits to poor women and has since spread to some 100 countries worldwide.

"I am absolutely delighted, I can't believe it has really happened," Yunus told Norwegian broadcaster NRK. "I am so happy," he added, saying the prize was a dream.

"The poorest get loans, this has to do with human rights and human dignity," committee chairman Ole Danbolt Mjos said. "We wish to send a signal to the whole world that the fight against poverty is the most important thing."

Yunus first learnt about winning the prize from a Norwegian television station, which called him to say he might get the award and then told him to hold the telephone line. Soon after, a voice from the other end confirmed he had won the Nobel Peace Prize.

His home was thronged by friends, colleagues and well-wishers as news of his winning the award spread across Dhaka.

Prime Minister Khaleda Zia congratulated him and said his achievement would boost Bangladesh's image. She wished him many successful years ahead.

Norwegian politicians, including Prime Minister Jens Stoltenberg and International Development Minister Erik Solheim welcomed the choice, as well as the Nobel committee's moves in recent years to broaden the concept of peace.

That was signalled with the 2004 choice of Kenyan human rights activists and environmentalist Wangari Maathai, who was cited for 'her contribution to sustainable development'.

The prize is presented on December 10, the anniversary of Swedish industrialist Alfred Nobel's death. Yunus said he planned to attend the ceremony in Oslo.

The announcement caps this year's announcements of the Nobel prizes endowed by Swedish dynamite inventor Alfred Nobel.

On Thursday, Turkish author Orhan Pamuk was awarded the literature prize. Last week, Andrew Fire and Craig Mello were awarded the medicine prize, fellow Americans John Mather and George Smoot shared the physics prize and Roger Kornberg was awarded the chemistry prize.

New York-based professor Edmund Phelps of Columbia University on Monday improved the US record when he was awarded the economics prize, a prize that was not mentioned in Nobel's will.

The 2005 peace prize was shared by the UN nuclear watchdog the International Atomic Energy Agency and its head, Mohamed ElBaradei, for efforts to prevent nuclear energy from being used for military purposes.

DPA

With PTI inputs