A sexually explicit film by the former Oscar winner Ang Lee won the coveted Golden Lion top prize at the Venice film festival last night. Lust, Caution is a Mandarin language espionage thriller which has already caused a stir with very graphic sex scenes.

Lee, who won the Golden Lion with Brokeback Mountain at Venice in 2005 before it went on to take Oscars, has argued that his film is “not pornography” although he did admit that it is not suitable for children.

The high hopes of many for the British film Atonement, starring Keira Knightley, were dashed, however — it won no awards.

There was some British success, including a prize for Paul Laverty, screenwriter for the Ken Loach film It’s a Free World.

Lee’s film, based on a novella by Eileen Chang, follows a Chinese woman in Japanese-occupied Shanghai during the second world war. She finds herself at the centre of a plot to seduce and kill a married enemy collaborator.

In America, where the film opens later this month, Lust, Caution has been given the NC17 rating. This can sometimes lead to only a limited release because many American cinema chains refuse to show such adult-only films for fear of putting off families.

The film also contains some violent scenes, especially one in which students stab and bludgeon a man to death graphically. It has already been announced that some of the sex scenes will be removed for the film’s release in China.

Lee is now acknowledged as one of the best and most versatile directors in the world. His output varies from Sense and Sensibility, based on the Emma Thompson screenplay of the Jane Austen novel, to The Ice Storm, a Hollywood story of suburban sexual politics. Other Venice winners include Cate Blanchett for her role as the young Bob Dylan in I’m Not There.

See www.labienalle.org for Venice Film Festival results

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