The movie, about the shady workings of Rio's Special Operations Police Battalion, faced an unsuccessful attempt by some officers to keep the film out of theaters at the time of its release last year.

Elite Squad is not a documentary, but claims to tell the true stories of 12 former officers from the black-uniformed paramilitary unit whose very insignia - a dagger-impaled skull - strikes fear into residents of Rio's shanty towns. Human rights groups have claimed the squad, which battles with armed drug gangs, fires indiscriminately.

"The film already became a very big thing in Brazil, and this reward gives us the strength to go forward," producer Marcos Prado said as he and Padilha accepted the Golden Bear statuette.

The festival's jury grand prize, which comes with a runner-up Silver Bear, went to Oscar-winning US director Errol Morris' Standard Operating Procedure, a documentary on the scandal over prisoner abuse at the US-run Abu Ghraib prison in Iraq.

Morris spent nearly two years pursuing interviews with soldiers involved in the notorious photos of abuse that emerged from the facility, combining them with re-enacted scenes.

Paul Thomas Anderson was named best director for strong Oscar contender There Will Be Blood, starring Daniel Day-Lewis as an obsessed turn-of-the-century oil man, which had been many critics' favorite to win the top honours.

Anderson, who won the Golden Bear in 2000 for Magnolia, paid tribute to Day-Lewis as "a terrific actor who makes any director a good director."

There Will Be Blood also took an award for outstanding artistic achievement, which went to Jonny Greenwood's musical score.

Sally Hawkins won the best actress prize for her part as a London teacher in British director Mike Leigh's Happy-Go-Lucky. Leigh has said the movie is meant to celebrate the power of positive thinking, and Hawkins described it as "extraordinary, beautiful and very special film."

The best actor award went to Reza Naji for playing a long-suffering father in Iranian director Majid Majidi's The Song of Sparrows. Naji plays Karim, who loses his job on an ostrich farm and then falls into working as a motorcycle taxi driver in Tehran as he struggles to make ends meet.

Chinese director Wang Xiaoshuai was credited with the best script for In Love We Trust, while the prize for an innovative film went to Lake Tahoe, directed by Fernando Eimbcke of Mexico.

The winners were chosen from among the 21 films in the competition by a six-member international jury led by Constantin Costa-Gavras, the Greek-born director of Z and Missing.