THE only literary prize that offers writers for children the opportunity to have their first book published is to be discontinued, following the withdrawal of the sponsor, Hodder Children's Books.

A spokeswoman for the Scottish Book Trust, administrator of the Fidler Award, which also includes a (pounds) 1500 advance, said yesterday that no new sponsor had been found and that the Fidler was unlikely to continue in its present form.

''The final decision as to what to do about the Fidler will be made after our new director arrives,'' she said.

This year marks the twentieth anniversary of the award, set up following the death in 1980 of Kathleen Fidler, the children's author, in conjunction with her publisher, Blackie and Son. Hodder took it over in 1996.

Any previously unpublished author is invited to submit a manuscript novel for children, aged eight to 12. This year, the contest attracted more than 160 manuscripts.

A Hodder spokesman said: ''We can confirm that this is our final year. We don't want to say any more than that.''

Several well known children's authors began their careers by winning the Fidler, including Catherine MacPhail from Greenock, and Lenzie-based Theresa Breslin, who went on to win the Carnegie Medal, the blue riband of children's fiction.

Breslin said yesterday that the end of the Fidler was a real body blow for children's literature: ''It's a crucial award. As far as I know, it's the only one for new children's writing and the reward is what every would-be writer dreams of, publication. Winning the Fidler changed my life.''

The final winner was anno-unced at the Edinburgh International Book Festival last night. She is Laura Matthews, a teacher from Dorset. Her story, Fish, is about the child of aid workers forced to flee from a country torn by drought and civil war.