Lithuanian President dubbed 'extraordinary European'

It was attended by top EU officials such as council chief Herman Van Rompuy and European Parliament chief Martin Schulz, as well as German finance minister Wolfgang Schaeuble who won the prize last year.

Grybauskaite, 57 years old, is a former EU budget commissioner and minister of finance in her country before being elected the first female president of Lithuania, in 2009.

She has a black belt in judo and has been nicknamed the "Iron lady" for her tough negotiating style and the harsh austerity measures her government imposed to get Lithuania out of the economic crisis, without external assistance.

European Parliament chief Martin Schulz said Grybauskaite is "an extraordinary European woman and an outstanding politician."

Schulz, a Social-Democrat, admitted that he and Grybauskaite are "far from seeing eye to eye on all political ideas, particularly on the policy of one-sided budgetary austerity." But he said he "greatly respects" the Baltic politician for being "courageous and straightforward."

"If we had more people in leading positions in Europe with such courage, we would have significantly fewer problems in the EU," Schulz said.

For her part, Grybauskaite dedicated the prize to the Lithuanian people in recognition of decades of hardship - including the fight for independence from the Soviet rule and overcoming the economic crisis.

She made an appeal for Europe to continue with "responsible fiscal policy" but also insisted on social measures.

"Today Europe will not be able to continue without responsible social decisions. Lithuania recovered from the global economic crisis not only by introducing financial discipline, but also by reaching social consensus," Grybauskaite said.

"Fiscal policies cannot ignore the most vulnerable if people’s trust is to be maintained ... We have to invest today so that disappointment does not become the guiding principle for Europe," she added.

Often compared to Chancellor Angela Merkel, who also won the Charlemagne Prize in 2008, Grybauskaite praised Germany for its leadership on European level.

"Today Germany plays the leading role in ensuring European stability and does not allow us to wander from the path of trust in Europe. That is why it is Germany which gets the strongest criticism – and also our deepest respect," she said.

Handed out every year since 1950 to individuals and institutions for their pro-European policies, the Charlemagne prize was only awarded to four other women before Grybauskaite: Merkel, Dutch Queen Beatrix, Norway's long-serving Prime Minister Gro Harlem Brundtland and Simone Veil, the first female President of the European Parliament.