Duffy had already made clear that she "didn't want to take on what basically is an honour on behalf of other poets and complicate it with money". "I thought it was better to give it back to poetry," she said in May, when she was chosen as laureate.

The prize, worth £5,000, will go to a UK poet working in any form – including poetry collections for adults and children, individual poems, radio poems, translations and verse dramas – who has made the "most exciting contribution" to poetry that year. "I'm delighted, with the assistance of Buckingham Palace and the Poetry Society, to be founding this new award for poetry. With the permission of Carol Hughes, the award is named in honour of Ted Hughes, poet laureate, and one of the greatest 20th-century poets for both children and adults," said Duffy in a statement announcing the new prize.

Gregg's books include All of It Singing (2008), In the Middle Distance (2006), Things and Flesh (1999), Chosen by the Lion (1994), The Sacraments of Desire (1991), Alma (1985), Eight Poems (1982) and Too Bright to See (1981), all published by Graywolf Press. She has received a Guggenheim Fellowship, a Lannan Literary Foundation Fellowship, a National Endowment for the Arts grant, a Whiting Writer’s Award, the William Carlos Williams Award, and multiple Pushcart Prizes. Gregg has taught at the University of Iowa, Columbia University, and the University of California at Berkeley. She currently lives in New York and teaches at Princeton University. She received her B.A. and M.A. from San Francisco State University.

The poet laureate Andrew Motion, who chaired this year's judges, said he was delighted that Hadfield was the winner. "Nigh-No-Place shows that she is a remarkably original poet near the beginning of what is obviously going to be a distinguished career." The other judges were poets Lavinia Greenlaw and Tobias Hill.

Hadfield may have to pinch herself when she looks at the company she joins. Previous winners of the prize, created in 1993 by the Poetry Book Society, include Seamus Heaney, Carol Ann Duffy, Don Paterson and Ted Hughes.