Diabetic retinopathy (DR) is a microvascular complication of long-term diabetes and it is the major cause of visual impairment because of changes in blood vessels of the retina. Major vision loss because of DR is highly preventable with regular screening and timely intervention at the earlier stages. The presence of exudates is one of the primitive signs of DR and the detection of these exudates is the first step in automated screening for DR. Hence, exudates detection becomes a significant diagnostic task, in which digital retinal imaging plays a vital role. In this study, the authors propose an algorithm to detect the presence of exudates automatically and this helps the ophthalmologists in the diagnosis and follow-up of DR. Exudates are normally detected by their high grey-level variations and they have used an artificial neural network to perform this task by applying colour, size, shape and texture as the features. The performance of the authors algorithm has been prospectively tested by using DIARETDB1 database and evaluated by comparing the results with the ground-truth images annotated by expert ophthalmologists. They have obtained illustrative results of mean sensitivity 96.3%, mean specificity 99.8%, using lesion-based evaluation criterion and achieved a classification accuracy of 99.7%.