Bigelow became the first woman in Oscar history to win the directing award, a feat that sparked a standing ovation from the A-List crowd inside Hollywood's Kodak Theatre.

Only three other women have been nominated for best director Academy Awards, including New Zealander Jane Campion for the The Piano in 1994, and Bigelow hopes her breakthrough will open the floodgates for other female directors.

"I hope I am the first of many," said Bigelow, whose past films include the 2002 thriller, K-19: The Widowmaker, starring Harrison Ford and the 1991 Keanu Reeves action movie Point Break.

Moments after Bigelow, 58, accepted her directing award, she was back on stage when The Hurt Locker was named best picture, trumping Avatar, the sci-fi extravaganza directed by her ex-husband James Cameron.

"There is no other way to describe it," Bigelow said.

"It is the moment of a lifetime."

The Oscar ceremony was billed as a David versus Goliath battle between The Hurt Locker, which cost just $16.54 million to make, against Avatar, with a budget of $441.16 million.

Just like the story in the Old Testament it was the underdog that came out on top with six awards, including original screenplay, sound editing, sound mixing and film editing.

The Hurt Locker, a tense drama following an American military bomb disposal unit, has made just $20.96 million at the box office, compared to Avatar's $2.75 billion, the highest grossing film of all time. Avatar won three Oscars - visual effects, cinematography and art direction.

Australia had four nominees: short filmmakers Luke Doolan and Drew Bailey; costume designer Janet Patterson for Bright Star; and best picture nominated producer for District 9 Carolynne Cunningham. They all came up empty-handed.

The four acting Oscars largely followed the script with Sandra Bullock, playing a mother who takes in a homeless boy in The Blind Side, relegating Meryl Streep (Julie & Julia) to Oscar bridesmaid again.

Heavy favourites Jeff Bridges (Crazy Heart) won best actor, Christoph Waltz (Inglourious Basterds) took the supporting actor.