The winner of the award for best British film will now receive £20,000, a huge jump from the £5,000 previously up for grabs.
President of this year’s jury is actor Danny Huston (The Constant Gardener, 21 Grams), who will also attend the world premiere of The Kreutzer Sonata at the Festival.
The other jurors are producer Sigurjon Sighvatsson (Zidane: A 21st Century Portrait), Golden Globe Best Actress nominee Joely Richardson (Nip/Tuck), director Iain Softley (Inkheart, The Skeleton Key) and - perhaps most surprisingly - Orange-Prize nominated author Scarlett Thomas (The End of Mr Y).
The Jury will also preside over the PPG Award for Best Performance in a British Feature Film.
Jury President, Danny Huston, said: "I am thrilled to be coming as President of the Michael Powell Jury to the Edinburgh Film Festival – A festival that my father [John Huston] described as 'the only festival worth a damn'."
The EIFF has also announced an increase for the Skillset New Directors Award to £5000 (from £1500).
John Woodward, Chief Executive Officer of the UK Film Council, said: "Through the Michael Powell Award, the Festival recognises inspiring films from established filmmakers and newcomers reflecting the breadth and vibrancy of British filmmaking.
"This is part of our cash support to help turn the EIFF into a magnet for the best films and at the same time to support filmmakers in making their next film."
EIFF Artistic Director Hannah McGill added: "This is a wonderful Jury befitting a very exciting year for the Michael Powell Award. Scarlett Thomas is easily one of the country's finest and most ambitious young writers, and Joni Sigvahtsson is that rare beast: a Hollywood power broker with a sustained and passionate interest in quality world cinema.
"Danny Huston and Joely Richardson, meanwhile, are charismatic stars in their own right as well as inheritors of two of their industries' most enviable sets of genes.
"John Huston, Danny's father, was a President of EIFF back in the 1960s; and we are actually showing a film by Tony Richardson, Joely's father, as part of our Jeanne Moreau retrospective.
"Iain Softley is a director I really respect, who has done fantastic work in both the UK and Hollywood, going back to his brilliant debut Backbeat in 1994 and his great adaptation of Henry James' The Wings of the Dove (which starred another EIFF 2008 guest, Linus Roache).
"We are so looking forward to having these individuals join us in Edinburgh, and we await their thoughts on the films with great curiosity."
The nominees for this year's Michael Powell Award are: Better Things (Duane Hopkins); Donkey Punch (Oliver Blackburn); Dummy (Matthew Thompson); Faintheart (Vito Rocco); Helen(Christine Molloy & Joe Lawlor); Somers Town(Shane Meadows); Stone Of Destiny (Charles Martin Smith); Summer(Kenny Glenaan) and The Edge Of Love (John Maybury).