Acclaimed young novelist Hari Kunzru has refused to accept a prestigious literary prize in protest at the “poisonous” editorial stance of its tabloid newspaper sponsor.

Kunzru, who is of mixed race, turned down this year’s Llewellyn Rhys Prize for his first book, The Impressionist, and the accompanying £5,000 donated by the Mail on Sunday. A shocked audience in London was on Thursday told by his agent that he was upset by the newspaper’s stance on immigration. The author was not at the awards lunch as he was at a family wedding in India. However, he had written a statement to be read out by his agent, Jonny Geller.

Kunzru, 34, was named winner by chairman of judges Helen Dunmore, who described his tale about an Anglo-Indian man’s life in England as a “superbly entertaining comic odyssey”.

It was then Geller’s turn to announce that while Kunzru — who has earned a reported £1 million from the book — regarded it as a “great honour” to have won, he was “with regret” unable to accept.

Reading from the statement as he stood beside a stony-faced Peter Wright, the Mail on Sunday editor, Geller said: “Along with its sister paper, the Daily Mail, the Mail on Sunday has consistently pursued an editorial policy of vilifying and demonising refugees and asylum-seekers. As the child of an immigrant, I am only too aware of the poisonous effect of the Mail’s editorial line. The atmosphere of prejudice it fosters translates into violence and I have no wish to profit from it.”

The newspaper agreed to his request to donate the prize money to the Refugee Council and promised to pay £5,000 to another winner.