After a storming opening number from Bruce Springsteen and his E Street Band, US rapper LL Cool J, the Grammys host, launched straight into what the music industry had been talking about for a day -- Houston's shock death.
"There is no way around this. We've had a death in our family," he said, adding: "The only thing that feels right is to begin with a prayer for a woman who we loved, for our fallen sister, Whitney Houston."
The audience, with stars including Paul McCartney in the front row, then watched a clip of Houston singing one of her greatest hits, "I Will Always Love You," and gave her a standing ovation.
"Whitney, we will always love you," said LL Cool J. "This night is about something truly universal and healing; this night is about music."
Adele and iconic 1960s band the Beach Boys were both making comeback performances at the show, where other stars performing included McCartney and Coldplay.
The British songstress won an early award barely 20 minutes into the show, with the best pop solo performance for "Someone Like You."
"My life changed when I wrote this song," said the Briton, also thanking the doctors who carried out the surgery which forced her to cancel a US tour late last year.
But Houston's death barely 24 hours before the show triggered a wave of tributes for the singer, whose body was found in her fourth-floor room in the Beverly Hilton hotel, shortly before a pre-Grammys gala evening.
"She had everything, beauty, a magnificent voice. How sad her gifts could not bring her the same happiness they brought us," said legendary singer Barbra Streisand, retweeted by Grammys organizers shortly before the show.
The late Amy Winehouse's father Mitch, accepting a Grammy on his daughter's behalf along with veteran Crooner Tony Bennett for their duet "Body and Soul," said: "We miss our daughter so much."
"There's a beautiful girl band up there in heaven," he added, referring to the deaths of the two troubled singers.
Organizers hastily added a performance by US singer Hudson to the awards show, as part of a "respectful" tribute at the Grammys, while the veteran producer who discovered Houston said she would want the show to go on.
"Simply put, Whitney would have wanted the music to go on," said Clive Davis, Houston's mentor who said he was "personally devastated" by her death.
Houston's family issued a statement Sunday, saying: "We are devastated by the loss of our beloved Whitney. This is an unimaginable tragedy and we will miss her terribly."
ABC news reported Sunday that Houston -- who had been due to attend the Saturday night party -- was found "lifeless," in her bathtub, but the cause of death was not immediately known.
The LA County Coroner's office reiterated that there appeared to be no suspicious circumstances surrounding the death.
"At this time, there are no signs of foul play," Assistant Chief Coroner for Los Angeles County Ed Winter told reporters shortly before the Grammys show kicked off.
A further scare came Sunday when Houston's daughter Bobbi Kristina, from her stormy 15-year marriage to singer Bobby Brown, was rushed to hospital to be treated for stress. She was later released.
With a ferociously powerful voice and a dazzling range, Houston achieved stardom as the "Queen of Pop." She also appeared in hit movies such as "The Bodyguard" and "Waiting to Exhale."
Mentored by Davis, the pop-soul singer had a string of 11 number one hits in the 1980s and 1990s including "How Will I Know," "Saving all My Love for You," and "I Will Always Love You." Houston won six Grammys.
However she suffered a major career setback after admitting drug use during her tumultuous marriage to Brown, and her health spiraled downward.
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