Cynthia Ozick and Raymond Carver have been awarded the nation's newest--and one of the most lucrative--literary honors.

The Mildred and Harold Strauss Livings, awarded by the American Academy and Institute of Arts and Letters, provide two "writers of demonstrated ability" with $35,000 a year tax free for five years to cover living expenses. (Hence the name "livings.")

"It's like being hit by King Midas' wand," Ozick said yesterday from her upstate New York home. The acclaimed short-story writer and author most recently of "Levitations: Five Fictions," said, "The timing is fantastic, because next September my daughter starts college and we were worrying about tuition." Ozick feels slightly guilty about "winning the Midas literary lottery" (but then "every silver lining has a cloud") and worries that the stipend will put some pressure on her "to live up to it." But otherwise, her "obscure life" will not change--despite the advice of her editor, Robert Gottlieb at Knopf, whose first suggestion, she said, was to "get a cleaning lady."

Carver, reached yesterday in Washington State, said, "It changed my life immediately. It enabled me to resign my teaching position" at Syracuse University. (In fact, the award requires recipients to quit their jobs.) The poet, playwright and short-story writer ("What We Talk About When We Talk About Love" and other collections) said, "I have the greatest sense of freedom I've ever had in my life," and may begin a novel soon.

The renewable award is funded by a bequest from the estate of the late Harold Strauss, editor-in-chief at Knopf from 1942 to 1966, who published John Steinbeck and Yukio Mishima, among others. Nominations were submitted by the 250 members of the Institute, none of whom is eligible for the award. The winners were selected by a committee made up of Elizabeth Hardwick, Donald Barthelme, Irving Howe and Philip Roth. AAIAL president Arthur Schlesinger announced the awards Tuesday.