Maine’s Village Soup, a Web- and newspaper-based news organization in midcoast Maine, was awarded $885,000 on Wednesday to build software designed to encourage “citizen journalism.”

Village Soup was among the first-year winners of Knight News Challenge, announced at the Editor & Publisher/Mediaweek Interactive Media Conference and Trade Show in Miami.

The 25 winners will receive a total of $12 million in grants, according to a news release from Knight.

The John S. and James L. Knight Foundation funded the contest with $25 million over five years. Its aim is to help lead journalism into its digital future.

Village Soup, founded and owned by Richard Anderson of Camden, began as an Internet-based news, advertising and community information service in Camden in the 1990s. More recently, it began publishing the newspapers Village Soup Times in Knox County and Village Soup Citizen in Waldo County.

Knight said Village Soup was awarded the money to build free software that will allow others to replicate the citizen journalism and community participation on its VillageSoup site. Citizen journalism has become a catch phrase to describe information shared digitally by people who are not trained as journalists.

Among others awarded Knight money on Wednesday was MTV, which will receive $700,000 to establish a Knight Mobile Youth Journalist in each of the 50 states and the District of Columbia to report weekly – on cell phones and other media – on key issues including the environment, 2008 presidential election and sexual health.