A YOUNG author has sold her first book to an American publisher for more than $100,000.

What makes the deal remarkable is that Joanne Rowling's tome is not a novel or a heavyweight biography, but a children's story. Two Hollywood studios and an independent American producer are also competing to buy the film rights for her 80,000-word yarn, Harry Potter and the Philospher's Stone.

"I think it is probably fair to say that most children's authors struggle along earning about £2,000 a year," said Christopher Little, Miss Rowling's literary agent. "As far as I know, the size of this deal is unprecedented."

Miss Rowling wrote the book, a modern work of fantasy and magic designed for eight-year-olds and upwards, against severe odds. Newly-divorced, unemployed and almost penniless she found herself struggling to survive in a one-bedroom flat in Edinburgh, a city she did not know and where she was almost friendless, with her three-month-old daughter, Jessica.

She would walk the streets pushing Jessica in a buggy until she fell asleep. She used to take the sleeping child to a cafe, order a coffee, spread her papers on the table and write feverishly until her daughter woke up again. When she was not too tired, she also wrote in the flat in the evenings.

Living on benefits, she could not afford a word processor and when she finished the book she couldn't even pay to have her manuscript photocopied. Instead, she typed two copies to send to agents in London.

Miss Rowling's achievement ranks close to the triumph of another recent first-time writer, Nicholas Evans, author of the The Horse Whisperer. The unemployed film producer, with children to support and banks closing in on him, said he cried himself to sleep at four in the morning until he finally sold his novel for $350,000.

Miss Rowling, 31, brought up in the Forest of Dean and a French and Classics graduate of Exeter University, says she was driven partly by economic necessity, partly to preserve her sanity, but also because she had "always scribbled away" writing stories since she was a child.

Harry Potter has attracted rave reviews. The Scotsman called it "an unassailable stand for the power of fresh innovative story-telling in the face of formula horror and sickly romance". Other critics have praised its blend of fantasy with humour and modern reality.

It tells the story of Harry Potter, an orphan who thinks he is an ordinary boy, brought up by a cruel uncle and aunt. He discovers he is a wizard and, as in C S Lewis's Narnia series, he passes through a time-warp into a world of make-believe. Encouraged by her success, Miss Rowling plans a further six books recounting the adventures of Harry Potter.

Backed by a grant of £8,000 from the Scottish Arts Council, the largest literary award it has made to a children's writer, she has bought a word processor and has delivered her second book to her publishers, Bloomsbury.

The idea for the book came to Miss Rowling on a train in 1990. She filled several boxes with notes but went off to Portugal to teach English. Almost immediately she fell in love with a Portuguese journalist and embarked on an ill-fated, three-year marriage.

She left her husband almost as soon as Jessica was born. She said: "I was very depressed and having a newborn child made it doubly difficult. The little money I had went on baby gear and all I could afford on housing benefit was a freezing, terribly grotty little flat. I simply felt like a non-person, I was very low, and I had to achieve something. Without the challenge I would have gone stark raving mad."

She struck lucky almost at once. "I didn't know anything about agents but I went to the library and looked up some addresses in the Artists' and Writers' Yearbook. Christopher Little was only the second agent I wrote to. I remember getting a letter back. I assumed it was a rejection note, but inside the envelope there was a letter saying, 'Thank you. We would be pleased to receive the balance of your manuscript on an exclusive basis.'

"It was the best letter of my life, I read it eight times. Later on Christopher rang and said there was an auction going on in America. He said I should get ready because a Mr Arthur Levene [Levine] of the Scholastic Press would pay a six-figure sum and would be ringing me in 10 minutes. I nearly died."