"Today, we decided to let the world know that our hope for a better future stands in young people like Malala Yousafzai," said the chairman of the conservative European People´s Party (EPP), Joseph Daul.[break]
The 16-year-old who has become an emblem of the fight against the most radical forms of Islamism has also been nominated for the Nobel peace prize.
She was shot in the head by the Pakistani Taliban on October 9 last year for speaking out against them and has gone on to become a global ambassador for the right of all children to go to school.
Three jailed Belarussian dissidents and US intelligence leaker Edward Snowden had also been short-listed for the parliament´s Sakharov prize.
The three Belarussians, Ales Belyatsky, Eduard Lobau and Mykola Statkevich, were jailed after mass protests in Minsk in December 2010 against the re-election of President Alexander Lukashenko.
Snowden, the US contractor who revealed widespread spying by the United states on friends and foes alike, has sought asylum in Russia.
Last year´s award went to detained Iranians, lawyer Nasrin Sotoudeh and film-maker Jafar Panahi, to honour those "standing up for a better Iran."
Past winners of the 50,000-euro ($65,000) prize include South African anti-apartheid hero Nelson Mandela and former UN secretary general Kofi Annan.
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Nobel Prize winner Malala visits her Pakistan hometown
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