Deepa Mehta's "Water" has lost the Oscar race for best foreign film to Germany's "The Lives Of Others" at the 79th annual Academy Awards.

"Pan's Labyrinth", a fable set in wartime Spain and directed by Mexican filmmaker Guilermo del Toro, and considered a hot rival to "Water" won three Oscars Sunday - for art direction, achievement in makeup and cinematography.

The other foreign film nominees include Algerian "Days of Glory" and Denmark's "After the Wedding", which begins in an Indian orphanage,

"Water", a Canadian entry, revolves around Indian widows while "The Lives of Others" tells of East Germany's secret police - the Ministerium fur Staatssicherheit, or Stasi - and its surveillance of artists during the Cold War