Indigenous novelist Melissa Lucashenko was announced winner of Australia's most prestigious literary award on Tuesday for her novel Too Much Lip.

"I only recently realised that I could be doing so much more in my writing and now this goes and happens," she said in a statement.

"I have no idea what to do next, other than keep plugging away at my civilising mission to mainstream Australia."

Lucashenko's novel is a tale about a "wise-cracking" woman who has spent a lifetime avoiding prison and her hometown but is pulled back to the latter when she finds out her grandfather is dying.

The novel weaves a "sometimes fabulous" tale of the very real politics of cultural survival to offer a story of hope and redemption for all Australians, according to judging panel chair Richard Neville.

"Too Much Lip is driven by personal experience, historical injustice, anger and what in indigenous vernacular could be described as 'deadly Blak' humour," he said.

The book was published by University of Queensland Press and the award will see Lucashenko receive $60,000 prize money.

Australian Associated Press