The annual prize offers three awards for journalism, a blog, and a book that are considered to be closest to George Orwell’s ambition "to make political writing into an art".
Judges for the Journalism Prize said that Russell was "the stand-out journalist in an outstanding field".
"Her empathy for the world beyond Westminster gives her writing an extra dimension often lacking in political insiders. There is an overriding humanity to her work, whether she is covering the death-throes of the last Labour government or the birth-pangs of the Coalition."
Accepting her award, Russell said she was "completely thrilled". She praised fellow nominees Philip Collins of the Times and Amelia Gentleman of the Guardian, who she said had "transformed the face of feature writing".
"Every single writer on that shortlist was somebody who added something fantastic to journalism," she said.
Russell also praised the Guardian and the Sunday Times for their "great humanity" in working with her while she privately suffered from cancer last year.
Speaking to Journalism.co.uk after the ceremony, Russell said that two pieces stood out for her among the six submitted: The joy of sex that has been bought for the disabled (paywall) and Speak up Nick or we’ll think the worst (PDF), both for the Sunday Times.
She added that she had been "too ill at the time" to enter the prize, and that it was her son who had selected the articles, filled out the form, and entered for her.
The judges for this year’s Journalism Prize were Jewish Chonicle political editor Martin Bright, who was shortlisted for the Journalism Prize 2007, and journalist and author Michela Wrong who was shortlisted for the Book Prize for all three of her books.
The Guardian led the shortlist for the prize, with nominations for Russell, Rachel Shabi, Declan Walsh, and Gentleman, who was nominated for the second consecutive year. Russell also beat competition from Gideon Rachman of the Financial Times and Catherine Mayer of TIME magazine.
Speaking at the ceremony, Bright praised Collins for bringing a "new edge to political journalism" and said that Gentleman was "very much a journalist in the Orwellian tradition".
The Blog Prize, now in its third year, was awarded to Graeme Archer for his posts on Conservative Home.
Archer, who describes himself as "a 41-year-old civilly-partered vegetarian Tory who lives in Hackney and is mildly obsessed with swimming", is also a statistician and writes about Conservative politics and London life for the blog.
His winning posts covered "everything from the coalition government to the controversy over a gay couple being turned away from a B&B, via competitive sport and open primaries", according to a release from the prize organisers.
The judges in the blog category were David Allen Green, who in responsible for the Jack of Kent blog and was shortlisted for the award in 2010, and Gaby Hinscliff, a former political editor of the Observer.
The judges, who voted unanimously for Archer, said that he was "a blogger with wonderful elegance and clarity" and "the one blogger who did most last year to make good political blogging into an art".
"Whether he writes on party politics or just about what he sees around him in Hackney, he is sharply observant and invariably thought-provoking. His posts are engaging or disconcerting in turns, regardless of the political views of the reader."
Excusing his not having not prepared a speech, Archer said that he "honestly did not expect to win in the company of such great writers".
"Some of us aren't professional writers but we still have that this itch to write about the world around us. Please don't feel that we are trying to stand on your patch."
This year's blog prize is the first to go to a recipient publishing under his own name. Awarded for the first time in 2009, the prize first went to an anonymous police detective that year for the blog NightJack, and in 2010 to the pseudonymous Winston Smith for the blog Working With The Underclass.
The author of the NightJack blog was subsequently revealed by the Times to be detective constable Richard Horton when Mr Justice Eady refused to grant an order to protect his anonymity.
The Times faced criticism in the wake of Horton's unmasking from Orwell Prize director Jean Seaton, who said that the newspaper had "shut down a voice". Horton was subsequently named as a judge for the 2010 prize.
This year's prize had a poverty theme, marking the 75th anniversary of George Orwell's journey to Wigan Pier, with each of his diary entries from the journey to be published on a blog by the Orwell Prize 75 years after they were first written.
The prize received a record number of entries, with 87 journalists and 206 bloggers entered along with a record-equalling 212 books.
In a unanimous decision from the judges, the book prize went to former lord chief justice Tom Bingham, who died last September, for his book The Rule of Law.
Judges said that it was "a book for our times: incisive, wise and clear. It is a book that is needed, and it is thrilling to reward a book about the law that isn’t for lawyers.
"It addresses the questions of freedom and order that are not only at the heart of our national debate, but touch on the upheavals around the world. And freedom and order are, of course, central to Orwell’s own work".
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