Le Carre said he was "enormously flattered" to have been named as one of 13 finalists for the Man Booker International Prize but asked to be withdrawn because he does not "compete for literary prizes".
The announcement in Sydney on Wednesday caused confusion among the judges over whether the master of intrigue could withdraw from an award he hadn't even entered.
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Authors shortlisted for the prize were chosen by the three-member judging panel and not whittled down from submissions.
"I'm enormously flattered to be named as a finalist for (the) 2011 Man Booker International Prize. However, I do not compete for literary prizes and have therefore asked for my name to be withdrawn," le Carre said in a statement to the judges, released by his literary agents Curtis Brown just 45 minutes prior to the announcement.
Judging panel chair Dr Rick Gekoski, a writer, academic and rare book dealer, said le Carre would remain on the list.
"John le Carre's name will, of course, remain on the list. We are disappointed that he wants to withdraw from further consideration because we are great admirers of his work."
Fellow judges, novelist Justin Cartwright and Melbourne-born publisher, writer and critic Carmen Callil, were at odds over whether le Carre could withdraw from the prize.
"I don't think we can give him the prize if he doesn't want it," Cartwright said. To which Callil replied, "I do."
"(It) doesn't matter, it's irrelevant, because it's not a prize that you enter," Callil told AAP after the announcement.
"Did Francis Assisi have a say in whether he was made a saint?"
Australian author David Malouf is among the finalists, along with the UK's Philip Pullman, and American authors Anne Tyler and Philip Roth.
The remaining writers come from Spain, Lebanon, Italy, and for the first time China.
This is the fourth Man Booker International Prize, which was set up in 2005 and is awarded every two years.
The international prize is significantly different from the annual Man Booker Prize in that it highlights a writer's overall contribution to fiction on the world stage. Judges therefore consider a writer's body of work rather than a single novel.
The winner will be announced at the Sydney Writers' Festival on May 18, the first time the STG60,000 ($A93,356) prize has been awarded in Australia. It will be followed by an awards ceremony in London on June 28.
"The 2011 list of finalists ... is, we think, diverse, fresh and thought-provoking, and serves to remind us anew of the importance of fiction in defining both ourselves and the world in which we live. Each of these writers is a delight and any of them would make a worthy winner," Dr Gekoski said.
Callil, who has published many of the shortlisted authors, would not be drawn on her favourite to win.
"... I've learned that you don't get your own way with this prize. I'm not sure if it will be a compromise," she told AAP at the announcement.
"The three of us will have to agree on it, I would have thought."
Past winners of the prize have included Canadian author Alice Munro (2009), Nigeria's Chinua Achebe (2007) and Albania's Ismail Kadare (2005).