A first-time novelist's story of a senile sleuth struggling with memory loss and the mysterious disappearance of her friend is in the running for a prestigious literary prize.

Elizabeth Is Missing by Emma Healey, who worked as a bookbinder before turning to writing, is one of five titles shortlisted for the Costa Book of the Year.

The judges described it as "gripping" and "a very special book".

She faces competition from Scottish novelist Ali Smith, who was made a CBE in the New Year's Honours, and Helen Macdonald's critically-acclaimed memoir H Is For Hawk.

Macdonald's book, about her time spent training a bird of prey as she comes to terms with her father's death, has already won the Samuel Johnson prize for non-fiction.

Smith's novel, How To Be Both, was shortlisted for the Man Booker Prize last year but failed to win and bookmakers William Hill have made her the 6/4 favourite ahead of Macdonald at 3/1.

The firm's spokesman Graham Sharpe said: "The Costa is packed with quality as usual - any of these titles would be a worthy winner but we believe Ali Smith looks the one to beat this year."

The Costa awards are divided into five categories: first novel, novel, biography, poetry and children's book, with the section winners eligible for book of the year which is announced on January 27.

Also shortlisted are Newport-based teacher Jonathan Edwards for his poetry collection My Family And Other Superheroes and Kate Saunders' Five Children On The Western Front which is a follow-up to the 1902 novel Five Children And It by The Railway Children author E Nesbit.

Costa boss Christopher Rogers described the shortlist as "a fantastic collection of books".

He said: "The Costa Book Awards are all about recognising great writing and a good read, and this year's winners are, as always, superb examples of this".

Each short-listed author receives a £5,000 prize with the overall winner collecting a further £30,000.

The judges, led by best-selling novelist Robert Harris, will announce the winner at a ceremony in central London.

Previous winners include Hilary Mantel and Nathan Filer whose debut novel, The Shock Of The Fall, won last year.