Canterbury author Margaret Mahy has won the country's top prize for children's literature.

Last night, Mahy, 75, and Dunedin illustrator David Elliot won the New Zealand Post Children's Book of the Year award for The Moon & Farmer McPhee.

It tells the story of McPhee and the effect the moon has on him and his animals.

Mahy said last night she was "enormously pleased", and she praised Elliot's contribution.

Working with a Kiwi illustrator was a rarity for her, she said.

"In this kind of book, the illustrations and the text simultaneously become part of the story," Mahy said. "I thought it was wonderful working with an illustrator who could give me his ideas and I could match up with the words I used."

The book was "special" because she had not been writing as frequently, she said.

The book was up against Leon Davidson's war epic, Zero Hour: The Anzacs on the Western Front, Fleur Beale's young adult fantasy, Fierce September, and Sherryl Jordan's humorous pirate novella, Finnigan & the Pirates.

Judging convener Ruth McIntyre said The Moon & Farmer McPhee was an "absolute treasure".

"The sheer poetry of the language and the gorgeous luminous illustrations each magnificently complements the other," she said.

"Thoughtful details such as the artfully placed cut-outs and fold-out pages, the joyful expressions on the animals' faces, the lovely wordplay and the positive message all add to the complete package."

The judging panel, which included writer and former teacher William Taylor and school librarian Dee Brooker, was impressed by the high standard of the books submitted for this year's awards, of which a quarter were from new writers and illustrators.

The Moon & Farmer McPhee also won the picture book category award.

Each category award winner received $7500, while Mahy and Elliot's supreme award win was worth an additional $7500.

Mahy has written more than 200 books and poems.

- © Fairfax NZ News