Emily Bitto and her partner opened a bar about six months ago. Heartattack and Vine is a stone's throw from Readings bookshop in Carlton and on several occasions staff there have directed customers to the bar to get their new copies of her novel, The Strays, signed.

"It's so embarrassing," she said.

The chances are it's something that she'll have to get used to. That's because on Tuesday night Bitto won this year's Stella Prize, which is awarded to an Australian woman writer whose book is deemed to be "excellent, original and engaging". It is open to fiction and non-fiction.

Bitto, who wins $50,000, said she was particularly pleased to win the Stella because its aims and intentions were things she believed in. The prize, which was first presented in 2013, was started in response to a perception that Australia's most significant literary prize, the Miles Franklin, was loaded against women writers.

The Strays, her first novel, is narrated by Lily, a lonely girl who gravitates into the orbit of an avant garde painter, Evan Trentham, and his bohemian family.

Bitto says she always wanted to write an "outsider" novel because many of her favorite novels take that form. "I wanted to write about a group of people who cut themselves off from mainstream culture. I've always been drawn to that, maybe because I grew up in a sort of hippy community in Queensland."

The artistic circle the Trenthams generate was partly inspired by the modernist artists who took up residence at John and Sunday Reed's home at Heide. But Bitto didn't want to use their stories or write a historical novel.

"The idea of the ordinary and extraordinary and that desire to be extraordinary and what that means and what it means for people who try to do that utopian society sort of thing fascinates me," she said.

The judges said The Strays was "like a gemstone: polished and multifaceted, reflecting illuminations back to the reader and holding rich colour in its depths". In his review for Fairfax Media, Michael McGirr described it as "an eloquent portrayal of the damage caused by self-absorption as well as a moving study of isolation".

Bitto says she allowed herself six months guilt-free no writing to work in the new bar. Now that time has come to an end. "My dream scenario is to be writing in the morning and working at the bar at night. It's quite nice to have that complete opposite."

But she insists she won't sell copies of The Strays at the bar: "If you ever see it there you can tell me I've sold out."