UPDATE 2-Curtain up on Grammys, Prayer for Houston

* Music's biggest awards show to honor late Whitney Houston

* Jennifer Hudson to sing a medley of Houston's songs

* Adele takes two early awards; Foo Fighters win four (Recasts with start of show, updates with early winners)

By Bob Tourtellotte

LOS ANGELES, Feb 12 (Reuters) - Bruce Springsteen and the E Street Band kicked off the Grammys on Sunday night with a rousing song even as the sudden death of pop star Whitney Houston cast a pall over music's biggest awards.

Springsteen and the band, playing "We Take Care of Our Own," had the crowd of pop, rock, rap and country stars up on their feet and clapping to the music in an effort to brighten the mood and ready the audience for a celebration of the industry's best performers.

Host LL Cool J took the stage and offered a prayer for Houston, her fans and her family. "Although she is gone too soon, we remain truly blessed by her musical spirit," he said.

Organizers then played a video of Houston performing her hit "I Will Always Love You" from a previous Grammy show. Later in the evening, actress and singer Jennifer Hudson, who won an Oscar for her role in movie musical "Dreamgirls," will perform a medley of songs in tribute to Houston who died in a Beverly Hills hotel room on the eve of the Grammys. The cause of her death has not been determined.

Top music stars from newcomers like Katy Perry, Rihanna and Adele to veterans like Bruce Springsteen and the Beach Boys will be on hand to remember Houston's life and music.

Grammy organizers give out awards in more than 75 categories and several early winners mentioned Houston in acceptance speeches. Singer Melanie Fiona, who won with Cee Lo Green for traditional R&B performance for "Fool For You" said she was inspired by Houston.

"Whitney Houston, I would not be standing up here if not for you," Fiona said. Backstage, she told reporters her mother had rocked her in the cradle to Houston's songs when she was a baby.

WINEHOUSE IN THE HOUSE

Perhaps the most poignant moment came when Mitch and Janis Winehouse, parents of late singer Amy Winehouse who died of excessive drinking in 2011, accepted the award for best pop duo or group performance - Amy and Tony Bennett - "Body and Soul."

"Long live Whitney Houston. Long live Amy Winehouse and long live Etta James," referring to the "At Last" singer who died earlier this year. "There's a beautiful girl band up there."

Country singer Taylor Swift picked up two awards for her song "Mean," about people she felt had wronged her, and Foo Fighters picked up three Grammys in rock music categories and a fourth for best long form music video.

DJ Skrillex won two Grammys for best dance recording and top dance/electronica album with "Scary Monsters and Nice Sprites."

British soul singer Adele, who came into the Grammys with six nominations and was expected to be a big winner, claimed her first Grammy for best pop vocal album with "21," and she earned a second Grammy for best short form music video with the song, "Rolling in the Deep."

All eyes will be on Adele in top categories such as best album and record of the year. Moreover, she will perform in front of a live audience for the first time since vocal cord surgery in November 2011. Fans will be listening to hear if her voice is back to its sultry, soulful best.

Rapper Kanye West, earned seven nominations, but was shut out of the top categories, paving the way for Adele to be the night's big winner - or surprise loser if she fails to overcome competition.

West won an early award for best rap album with "My Beautiful Dark Twisted Fantasy."

In the category of best album, Adele's "21" faces rockers Foo Fighters and their hit "Wasting Light," Lady Gaga with "Born This Way," Bruno Mars and his "Doo-Wops & Hooligans," and pop star Rihanna with "Loud."

Adele also figures prominently among nominees for record of the year where "Rolling in the Deep" squares off against rockers Bon Iver and "Holocene," Bruno Mars for "Grenade," Mumford & Sons with "The Cave," and Katy Perry for "Firework." (Reporting By Bob Tourtellotte; Editing by Stacey Joyce)