The Greater Manchester scheme's 30 pubs and restaurants had issued lifetime bans to individuals following gangland shootings, despite its members suffering threats of violence.
Shadow pubs minister Toby Perkins said: "Pubwatch is an incredibly important scheme that keeps problems in pubs to a minimum. It's a sign of the importance the industry places and we in the political scene place on responsible drinking.
"Pubs are the safest place for the consumption of alcohol, and this scheme supports that message. Congratulations to everyone involved in Pubwatch for the great work that you do."
Andrew Cowan, head of Diageo GB, which sponsors the National Pubwatch Awards, praised all 600 Pubwatch schemes, and said the movement had become highly successful. "The key to creating a great and safe night-time economy is to adopt the principles of Pubwatch.
"We work in a wonderful industry, but it's not perfect. Pubwatch makes it better and safer."
National Pubwatch chairman Steve Baker added that all the finalists had great organisational structure, had licensees who took ownership of their schemes, and had great relationships with the police.
"But the winner - Droylsden - goes the extra mile."