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The British film Slumdog Millionaire tonight looked set for an historic Oscar victory during a notably toned-down Academy Awards ceremony, in spite its 10 nominations lagging behind the 13 collected by Brad Pitt’s The Curious Case of Benjamin Button.

Slumdog, directed by Danny Boyle and made for a budget of only $15 million, had emerged as the overwhelming Oscar favorite during the long run up to the 81st Academy Awards, picking-up gongs at several other industry events, including the Golden Globes.

At tonight’s glitzy-but-recession-conscious ceremony at the Kodak Theatre in Hollywood, Slumdog was expected to take the biggest award of them all - the Oscar for Best Picture - in spite of having almost gone straight-to-DVD in the all-important US market. The bookmakers William Hill were pricing film at 1/10, one of the shortest odds ever offered for a Best Picture contender in the history of Oscars betting.

“It would be the biggest upset in modern Oscars history to see Slumdog lose,” said Pete Hammond, the veteran Hollywood awards pundit and Maxim film critic. “It hasn't stumbled once this awards season. It has had an unprecedented sweep.

“It's the equivalent of the perfect season in football or baseball.”

Rival nominees in the Best Picture category included two other British films: Frost/Nixon, about Sir David Frost’s post-Watergate television interviews with the impeached US president, and the Holocaust drama The Reader, starring Ralph Fiennes and Kate Winslet. The other contenders were Milk, a biopic of the openly gay San Francisco politician Harvey Milk, and The Curious Case of Benjamin Button.

With Slumdog and Boyle heavily favoured to win Best Picture and Best Director, pundits were instead looking to the acting honours for suspense. Sean Penn was seen as the front-runner for Milk in the Best Actor category, while Kate Winslet’s performance in The Reader was regarded as the most likely to earn Best Actress.

Nevertheless, Penn faced a wild-card rival in the form of Mickey Rourke, whose performance in The Wrestler earned him a Golden Globe and a Best Actor gong at the Independent Spirit Awards. Winslet, meanwhile, faced daunting competition from the two-time Academy Award winner Meryl Streep, for Frozen River.

Before this year’s Oscars, Winslet had been nominated for an Academy Award five times but never won.

In the supporting categories, the late Australian actor, Heath Ledger, was expected to become only the second actor in history to win a posthumous Oscar for his role as the Joker in The Dark Knight, a year after his death from a drug overdose in New York. And, in the supporting actress category, Penelope Cruz was the favourite to become the first Spanish actress to win an Academy Award for her performance in Woody Allen’s Vicky Cristina Barcelona. Like Mickey Rourke, Cruz was a winner at the Spirit Awards in Santa Monica on Saturday.

It wasn’t just the actors and directors who had a lot at stake at tonight's Oscars ceremony. The organisers of the event - hosted this year by the Australian actor Hugh Jackman - were also under intense scrutiny, having introduced a new-look format to help arrest plunging ratings. “It's going to be a show that takes some bold risks.” claimed Sid Ganis, president of the Academy of Motion Pictures and Sciences. The event has also come under pressure because of the recession: this year, advertising revenues are down by an estimated 16 per cent.

As Hollywood’s A-List prepared to arrive on the vast red carpet unrolled across Hollywood Boulevard, the satirical Razzie awards were being held only a few blocks away, celebrating the worse releases of 2008. The Canadian comic Mike Myers dominated the event, picking up three Golden Raspberries for his flop The Love Guru. Myers did not show up to collect the gongs in person.

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