Europe is awarded Nobel Peace Prize for transforming 'continent of war to one of peace' (but Clegg has to represent Britain as Cameron has stayed at home)

Lavish: Political leaders and dignitaries gather for the Nobel Peace Prize Ceremony at Oslo City Hall, Norway

The City Hall in Oslo was host to the prime ministers of Europe during the Nobel Peace Prize 2012

Attendees heard Nobel Committee President Thorbjoern Jagland praise the EU's role in transforming a European 'continent of war' into a 'continent of peace'.

He said: 'That should not be taken for granted - we have to struggle for it every day'.

Mr Jagland emphasised that the same prize had been awarded in the 1920s to the foreign ministers of France and Germany marking post-First World War reconciliation. Then in the 1930s the continent had degenerated into conflict and war once more.

But he said now was the time to celebrate prolonged peace - and welcome the French and German leaders sitting side by side in Oslo.

However, the announcement of the peace award in October caused surprise and controversy in the midst of one of the EU's worst crises and at a time of deep - albeit non-violent - rifts between major member states.

Today's ceremony comes in the week of yet another EU summit to try to resolve the continuing euro-crisis which, according to UK Independence Party leader Nigel Farage risks 'engendering violence, poverty and despair across Europe'.

A peaceful day for this deputy: Nick Clegg arrives at the City Hall for the Nobel Peace Prize presentation

President of the European Council Herman Van Rompuy, President of the European Commission Jose Manuel Barroso and President of the European Parliament Martin Schulz hold the Nobel Peace Prize certificate and medal, after accepting it on behalf of the EU

But European Commission President Jose Manuel Barroso said: 'This is an award for the European project - for the people and the institutions - that day after day, for the last 60 years, have built a new Europe.

'We will honour this prize and we will preserve what has been achieved. It is in the common interest of our citizens.

And it will allow Europe to contribute in shaping that 'better organised world' in line with the values of freedom, democracy, human rights and rule of law that we cherish and believe in.

'The last 60 years have shown that Europe can unite in peace. Over the next 60 years, Europe must lead the global quest for peace.'

Speaking after the ceremony, Nick Clegg said: 'Today's prize is a tribute to the people of Europe, not an institution.

'For centuries, the idea of Europe and peace was a contradiction in terms.

'The fact that we have not been to war with our neighbours for nearly 70 years now is a testament to the sacrifices of the generations that have gone before us and the hard work since.

'Coming from a family that was brought together in the safety of Britain after suffering the horrors of both world wars in different parts of the globe, this prize has particular resonance.

'At the start of what will be another busy week for European cooperation it has been helpful to speak to Angela Merkel, Francois Hollande and other leaders about pressing issues such as banking reform and the EU Budget.'

Norway's King Harald, left, Norway's Queen Sonja, second left, Norway's Crown Princess Mette Marit and Norway's Crown Prince Haakon attend the Nobel Peace Prize ceremony

Queen Sonja and Crown Princess Mette-Marit of Norway applaud during the ceremony

Meanwhile, with more than 1,200 guests and 40 chefs, Sweden will holds its annual awards ceremony hoping a year of cost-cutting will not be noticed by the laureates, royals or the Who's Who of Sweden attending the lavish dinner.

The ceremony tops a week of events in Stockholm for the winners of the literature, physics, chemistry, medicine and economics prizes that see Sweden briefly enjoying the kind of extravagance usually associated with previous centuries.

But this year the prize money has been cut by a fifth, contracts with suppliers have been renegotiated and even the number of chauffeur-driven cars for Nobel winners and their guests has been reduced.

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Some wonder whether guests will perceive any austerity in the week's events - which last year cost around 20million Swedish crowns (£1.8million) and usually feature Sweden's best cooks, designers and musicians, as well as thousands of flowers flown in from Italy.

Making peace: European leaders gather for a photograph after the ceremony

Hopefully peaceful discussions... German Chancellor Angela Merkel, left, and French President Francois Hollande talk as Italian Prime Minister Mario Monti looks on

'There have been some cuts,' Nobel Foundation Executive Director Lars Heikensten told reporters, but refusing to give any details. 'You will not notice them.' For more than a century, the foundation has managed the roughly $450million (£280million) capital that forms the base for the awards, donated in the will of dynamite inventor Alfred Nobel.

But in recent years returns have suffered amid the global crisis.

'We are in this forever and we should safeguard it (the prize),' said Heikensten, a former Swedish central bank chief known for reducing staff during his tenure.

The awards are now worth $1.2million (£0.74million) each, down from around $1.5million (£0.9million) in recent years.

Still, this evening's festivities at Stockholm's City Hall - itself decorated with 11 kg of gold leaf - are unlikely to be spartan.

Details of the menu are only revealed minutes before the food is served, but guests at the event - touted as one of the world's biggest set dinners - will eat from some 7,000 pieces of porcelain using 10,000 items of silverware and drink from 5,400 glasses.

Chairman of the Norwegian Nobel Committee Thorbjoern Jagland speaks in Oslo City Hall during the Nobel Peace Prize 2012 award ceremony

Space is so tight guests are asked to avoid going to the toilet between courses to avoid jams in the aisle.

There will also be a fair share of bling, from jewel encrusted handbags to glittering tiaras, as Sweden's small and influential political and business elite jettisons its famed egalitarian image to hobnob with diplomats and political leaders from around the globe.

The strict dress code - white tie and tails for men and gowns for women - is complemented by a similarly strict code of behaviour.

Toasting, for example, is done Swedish style: raise your glass, look your table companions in the eyes, swing the glass in the air ever so slightly - no clinking - sip and repeat eye contact before setting the glass down.

The formality is in stark contrast to neighbour Norway where Australian pop-princess Kylie Minogue features when the European Union is handed this year's Nobel Peace Prize at a ceremony in Oslo on Monday.

The EU's win raised a few eyebrows when announced in October.

And Nobel week in Sweden has attracted its share of controversy with literature winner Mo Yan steering clear of human rights issues and refusing publicly to back a petition by fellow laureates to free jailed compatriot and Nobel Peace Prize winner Liu Xiaobo.

The Nobel Foundation, which organizes the prizes, will be hoping the dinner retains enough glamour, despite this year's cost cuts, to divert any attention away from such issues.