Friday's Nobel peace prize comes at a testing time for the European Union, praised for entrenching peace and democracy on the continent as it struggles to weather its worst crisis in 60 years.

Reactions to the award reflected the tightrope the EU walks, with praise and ridicule in equal measure.

"Europe faces the same sort of challenge it faced on birth," said Jean-Dominique Guiliani, head of the Robert Schuman Foundation, set up to honour the French politician who drove the first steps towards the EU's creation in the wake of World War II.

"Now either Europe surmounts the challenge and stays in the race, or it throws more sticking-plaster on a dying system and it becomes sidelined," he said.

In Berlin, London, Paris and Rome, leaders hailed the award for its recognition of the EU contribution to peace but agreed it should serve as a wake-up call to cement again an increasingly divided union.

"The last decades of peace in Europe -- that is a long time for those of us living in the European Union," said German Chancellor Angela Merkel. "But for history it is a blink of an eye. And that is why we must keep working on it."

"This under-rated European achievement has finally received the global recognition it deserves," said German politician Wilfried Martens, who heads the dominant group of conservative lawmakers in the European parliament.

Yet the Nobel Committee's choice also triggered a flood of recrimination.

It stunned Twitter netizens who asked what the European Union currently did for world peace or to quell unrest domestically.

"Anti-austerity protests in Portugal, Spain, Greece, Italy & France. Nationalism, Fascism, unemployment and poverty. Yeah EU deserves it!" @AnonOpGreece said on Twitter.

In Britain, it irritated eurosceptics who quipped that the $1.2 million prize might help solve the euro debt crisis.

In 1950, France and the then West Germany agreed to put their coal and steel industries under a single authority to show, in Schuman's words, "that a war between France and Germany becomes not only unthinkable but materially impossible."

Today the 27 member states in the bloc -- soon to be 28 when Croatia joins -- have never known such a long period of quiet after a history checkered with some of the bloodiest, most awful conflicts known to man.

In announcing the prize, the Nobel committee highlighted the EU's role after World War II left the continent prostrate and seemingly without a future as the United States and the Soviet Union faced off in the Cold War.

The EU and its predecessors "have over six decades contributed to peace and reconciliation, democracy and human rights," Nobel Committee president Thorbjoern Jagland said.

Initially six -- Belgium, France, Germany, Italy, Luxembourg and the Netherlands -- the EU ballooned from 15 to 25 members in 2004 when it embraced the first of the former Soviet states stranded behind the Iron Curtain.

Amid that euphoria, border posts were put into mothballs under the Schengen Treaty allowing passport-free travel and the single euro currency was launched with much fanfare.

The dream since has been dented as stinging austerity programmes aimed at combating the eurozone debt crisis undercut support for further centralisation in a European super-state headquartered in Brussels.

"What is in danger is the interior peace," said Martin Schulz, the German Socialist leader in the European parliament.

"We cannot live in a union where in one country people are really rich... and in others, people, even academics, have to rummage around rubbish bins to find something to eat."

Resentment at diktats laid down by Brussels to curb spending and enforce fiscal discipline has driven a backlash in the shape of mounting nationalist feeling, evident from Catalonia in Spain to Italy, Belgium and Scotland.

With wealthy members from the north at the throats of the allegedly spendthrift southern EU nations over the debt crisis, the Nobel may provide some much-needed political oxygen.

But analyst Giuliani scoffed at the idea of building a deeper political union to solve the bloc's economic woes.

"Like the founding fathers, the first thing is to sort the economic problems, the political solutions will follow," he told AFP. "If Europe doesn't overcome the challenge it will not survive."