The following correction was printed in the Guardian's Corrections and Clarifications column, Thursday June 3 2004
The word "ethnic" is misused in the article below. We refer to "the new generation of ethnic British writers". The Guardian style guide says: "Never say ethnic when you mean ethnic minority. It leads to such nonsense as the constituency has a small ethnic population." One of the lion kings of world literature, the silver-haired, bushy-eyebrowed American author John Updike, last night earned the gratitude of British writers when he assured them that they no longer have an awe-stricken inferiority complex about US novelists.

Completing the second day of a brief but glorious reign as new monarch of the Welsh book town of Hay-on-Wye, the writer praised the new generation of ethnic British writers. "With the empire coming back to Britain, you have a lot of different kinds of voices," he told the Guardian in an interview ahead of last night's sell-out discussion at the Guardian Hay festival.

Several years ago British pundits and writers reacted with dumbstruck horror to news that the Booker prize was considering making US authors eligible to compete. The fear was that Americans would win every year.

But Updike dismissed this trepidation as "an unnecessary idea", indicating he felt that modern British authors could punch their weight. Singling out Ian McEwan's bestselling novel Atonement, he said: "I thought it was a staggering book - something no American could have published.

"I have read almost every book by Muriel Spark. She is a marvellous writer. Iris Murdoch I am a great admirer of. I recall she was very harshly treated by the critics for some of her books".

Among ethnic minority writers, he mentioned Hanif Kureishi's The Body - "a short novel which I read with admiration".

Updike added: "I don't think the Americans would have taken over the Booker prize. There are quite enough prizes in America - there seem to be many more than when I was starting out. There is no reason why some paunchy American should be able to enter a British prize."

Part of a formidable triumvirate of US novelists, with Saul Bellow and Philip Roth, Updike had enjoyed virtually a royal progress through a town whose usual population is swollen from 1,300 to a record 80,000 for the festival.

Its director, Peter Florence, called him "the most distinguished American we have had at Hay" - praise which relegates the former president Bill Clinton's 2001 shenanigan to second place.

Asked about Iraq, Updike, who is regarded as conservative-leaning, said: "Going in seemed risky. Everyone held their breath - the average American did not know why we were entering an area so terribly fraught, hard to predict and control.

"I am not sure it is a horrible botch yet. I think George Bush, whatever his views, has to think of going back to Texas and letting someone else see if they can do better. This is not a good time to try to establish an empire and control the destinies of other countries."

Inveigled on to the Routemaster bus parked at the festival by the Guardian, Updike, 72, made light of the prospect of death and of the celebrity of his 50 years as a novelist and short story writer: "I am still a churchgoer. When I was 30, the idea I would some day die struck me as outrageous. Now it strikes me as not quite so outrageous."

Updike writes in a volume of youthful short stories: "The task of art is to give the mundane its beautiful due."

Asked to elaborate, he said: "It's up to us to find ways of making ordinary people and the mundane interesting. One of the pleasures of fiction is the discovery that you can invent a character and look out through their eyes as someone else.

"We write to escape ourselves. This is the curious freedom of the world of paper. You write and hypothesise, and it becomes real."

Updike was pre-eminent among 400 speakers and performers who have so far included Zadie Smith, the mountaineer Joe Simpson, James Kelman, Ken Loach, the comedy writer John Lloyd, Bob Geldof, Hari Kuzru, Howard Jacobson, Arnold Wesker, Malise Ruthven, the actor Toby Robinson and the MP Robin Cook.