Libraries are a vital community service and should be publicly funded, Alan Bennett has said.
The author, playwright and broadcaster spoke of the joy of reading and described how indispensable libraries are to nurture people's thoughts.
Reports last year suggested that since 2010 more than 300 libraries had closed and almost 8,000 jobs in libraries had been lost while 15,000 volunteers have been recruited.
Leeds-born Bennett was speaking at the presentation of the inaugural David Vaisey Prize for libraries in Gloucestershire.
"Libraries, like hospitals, like public transport, should come out of the rates. They are, or should be, a community service," he said at the Cheltenham Literature Festival.
"The best moments in reading are when you come across something ... a thought, a feeling, a way of looking at things, which you had thought special and particular to you.
"Now here it is, set down by someone else, a person you have not met, someone even who is long dead. And it is as if a hand has come out and taken yours.
"In the multiplication of such moments, libraries and librarians are indispensable and the David Vaisey Prize celebrates that."
The winning library was Bream Community Library in the Forest of Dean and volunteer James Robertson, 17, collected the £5,000 prize.
"To win this award is massive," said the teenager, who started volunteering at the library last year.
"Everybody at the library is enormously proud of all the effort that every volunteer has put in."
The judges, who included TV presenter and journalist Anne Robinson, praised Bream's initiatives, one of which is its Lego Club, which is used to promote literacy.
Children are encouraged to build Lego projects and gain inspirations from Lego books, which they are encouraged to read with their parents.
The children are encouraged to revisit the library, which holds regular quizzes based on their reading, with prizes.
"With the Lego idea, Bream found a way of not just successfully helping to improve literacy but developing a love of books," said Robinson, best known for TV game show The Weakest Link.
"Young people, with limited options for engagement in the village, are coming into the library - some for the first time - and borrowing books."
The award was launched in honour of David Vaisey CBE, who dedicated his life to libraries, becoming head of the Bodleian Library at Oxford University and Keeper of the archives there.
Mr Vaisey and Bennett, who have been friends for more than 50 years, first met at Exeter College, Oxford.
"We were both of us on a full grant which, though not munificent, was adequate. One notion that we have lost in David's and my lifetime is of the state as nurturer," said Bennett.
"For both of us, the state was a saviour delivering us out of poverty and putting us on the road to a better life."