The Norwegian Nobel Committee awarded the European Union the Peace Prize for its long-term role in uniting the continent and said the union had contributed to the advancement of peace and reconciliation, democracy and human rights on the continent.
The award is seen as morale boost for the bloc as it struggles to resolve its debt crisis. But opinion has been split over whether the EU should receive the award given its current problems and the rising unemployment and protests sparked by measures aimed at keeping the bloc intact.
"The vote today by the Nobel committee shows that even in these difficult times the European Union remains an inspiration for countries and people all over the world, and that the international community needs a strong European Union, " Jose Manuel Barroso, the president of the European Commission, said shortly after the announcement.
But criticism was equally swift. Norwegian broadcaster NRK quoted Socialist Left Party leader, Audun Lysbakken, saying that giving the award to the EU meant the prize was now politicized.
"I find it hard to see that it is something that has happened in the last year that justify this prize, " he said adding that it was the "wrong prize at the wrong time."
Nigel Farage , leader of the populist U.K. Independence Party and a member of the European Parliament (MEP) also criticized the announcement.
"I think it's an absolute disgrace that brings the Nobel prize into complete disrepute, " he told CNBC.com. "What you saw this week in Greece is that EU control over national democracy is leading to Greece violence and disharmony."
Martin Callanan, an MEP for the U.K. Conservatives had similar thoughts and questioned the timing of the award.
"The Nobel committee is a little late for an April fool's joke, " he said in a statement. "20 years ago this prize would have been sycophantic but maybe more justified. Today it is downright out of touch."
In announcing the award, the Nobel Committee praised the 27-nation bloc for the role it played it stabilizing former communist countries after the fall of the Berlin Wall in 1989 and for the rebuilding done after World War Two.
Edward McMillan-Scott, vice-president of the European Parliament, pointed to a recent Eurobarometer survey of 25, 000 citizens that showed the highest appetite for EU action was in the field of human rights and democracy.
"The European Parliament Committee of human rights has since the 1980s been a voice of these citizens and we continue as MEPs to follow closely the development of reform worldwide, " he told CNBC.com.
The award is a boost to politicians who have been trying to win greater support for their actions to keep the bloc together despite a four-year debt crisis.
The Union's top official, Herman Van Rompuy, told reporters in Helsinki that the prize recognized the bloc's role as the "biggest peacemaker in history."
"Europe got through two civil wars in the 20th century and we have established peace thanks to the European Union. So the European Union is the biggest peacemaker in history, " he said.
Another official, Martin Schulz, the president of the European Parliament, also welcomed the award saying he was deeply touched and honored.
"Reconciliation is what the EU is about. It can serve as an inspiration. The EU is a unique project that replaced war with peace, hate with solidarity, " he said on the social networking site Twitter.
The prize, worth $1.2 million, will be presented in Oslo on December 10.