The film, starring Irish actors Cillian Murphy and Liam Cunningham, has been selected for competition at the French festival in late May.

It will vie with Andrea Arnold's National Lottery funded Red Road, Spanish director Pedro Almodovar's Volver and Sofia Coppola's Marie-Antoinette for the festival's top honour, which was won last year by Belgian drama, L'Enfant.

US director Richard Linklater is in contention for his film adaptation of non-fiction book Fast Food Nation, while Il Caimano (The Caiman), a satirical portrait of Italian prime minister Silvio Berlusconi from director Nanni Moretti is also included in the short list.

Tom Hanks, Bruce Willis, Hugh Jackman and Kirsten Dunst are among the stars expected at this year's event, which opens on May 17 with a gala screening of The Da Vinci Code, the film version of the controversial Dan Brown bestseller.

The Wind That Shakes the Barley begins in 1919 and tells the story of two brothers who fought together during the Irish war of Independence, before finding themselves on opposing sides as civil war ensued.

The film was shot on location in Cork and Kerry for seven weeks.

Simon Perry, Chief Executive of the Irish Film Board, congratulated Ken Loach and the production team, on what he described as a tremendous achievement.

"The Wind That Shakes The Barley deals with an important and difficult period in Irish history from a strictly human point of view," he said.

"This is the first (Irish) film selected for competition in Cannes since John Boorman's The General (in 1998) and we are delighted that Ireland will once again be represented at the world's most prestigious festival."

Irish producer Andrew Lowe of Element Films said he was delighted the film had been selected for the most prestigious award in the world of film.

"This is a great credit to Ken, Paul, Rebecca and all the cast and crew, Irish and British, who worked so hard to make this film on a very tight budget," he said.

The UK Film Council expressed its delight that two National Lottery funded films, Ken Loach's The Wind that Shakes the Barley and Andrea Arnold's Red Road, are in the running for the Palme d'Or prize.

Both films were co-funded through the UK Film Council's New Cinema Fund, while Red Road and Richard Linklater's Fast Food Nation were supported through its Development Fund.

Paul Trijbits, Head of the New Cinema Fund, said: "It is fantastic that the Cannes selection committee has selected both Ken Loach's and Andrea Arnold's films for competition not only for the films and filmmakers themselves but because it also confirms that British film talent continues to produce films which excite the most prestigious film festival in the world."

Creative Industries Minister James Purnell said it was great to see two strong British films in the competition this year.

"It's particularly heartening that films including Red Road and The Wind that Shakes the Barley have benefited from funding via the UK Film Council," he said.

"This shows that Lottery money is continuing to make an absolutely essential contribution to our film industry. I wish all the competitors every success."

Red Road, starring Natalie Press, is a powerful tale of obsession and forgiveness which was produced by Red Road Films, a subsidiary of Glasgow-based Sigma Films, in collaboration with Zentropa Films in Denmark.

It was originally developed by the UK Film Council's Development Fund, the Glasgow Film Office and is also funded by Scottish Screen.

Full list of nominees

Pedro ALMODÓVAR VOLVER
Andrea ARNOLD RED ROAD
Lucas BELVAUX LA RAISON DU PLUS FAIBLE
Rachid BOUCHAREB INDIGÈNES
Nuri Bilge CEYLAN IKLIMLER
Sofia COPPOLA MARIE-ANTOINETTE
Pedro COSTA JUVENTUDE EM MARCHA
Guillermo DEL TORO EL LABERINTO DEL FAUNO
Bruno DUMONT FLANDRES
Nicole GARCIA SELON CHARLIE
Xavier GIANNOLI QUAND J'ÉTAIS CHANTEUR
Alejandro IÑÁRRITU BABEL
Aki KAURISMÄKI LAITAKAUPUNGIN VALOT
Richard KELLY SOUTHLAND TALES
Richard LINKLATER FAST FOOD NATION
Ken LOACH THE WIND THAT SHAKES THE BARLEY
LOU Ye SUMMER PALACE
Nanni MORETTI IL CAIMANO
Paolo SORRENTINO L'AMICO DI FAMIGLIA

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