Danseuse au repos was bought by an anonymous telephone bidder for pounds 17,601,500 during Sotheby's sale in London of Impressionist and Modern art. The work, which comes from the acclaimed series of informal studies of young ballet dancers which Degas began in the late 1870s, was expected to fetch between pounds 5m and pounds 7m.
The only work on paper to fetch a bigger sum is Picasso's Acrobat and Young Harlequin, which went for pounds 19m in 1988.
Yesterday's sale broke all records for the French Impressionist. The previous record price for a Degas was the pounds 6.8m paid for the oil painting, Les Blanchisseuses, Les Repasseuses, in 1987.
A second Degas pastel, Femme assise devant un piano, a composition of a woman studying a piano score, sold for pounds 3.08m. The two works were sold by descendants of Jules-Emile Boivin, the French businessman and friend of Degas who bought the pastels from the Durand-Ruel Gallery in Paris in 1885. He paid 1,200 francs for Danseuse au repos.
Michael Strauss, co-chairman of Sotheby's Impressionist, Modern and Contemporary Art Worldwide, described Danseuse au repos, which was executed in about 1879, as "the most beautiful work by Degas to have appeared at auction since the sale of L'Attente in New York in 1983.
Another highlight of yesterday's sale was a painting of waterlilies - Nympheas, by Claude Monet, which sold for pounds 3,081,500. Sotheby's hailed the sale as its "most successful ever". The auctioneers said its 47-lot sale raised pounds 50m.
Danseuse au repos was sold in less than five minutes for a bid price of pounds 16m before commission. Other works which exceeded their initial price tag included Henri Matisse's Robe Jaune et Robe Arlequin, which sold for more than pounds 7m.
Sotheby's deputy European chairman, Melanie Clore, said there was little danger of a return to the inflated art prices seen a decade ago.
"Today's is a very different market from the 1980s," she said. "It is much healthier and not driven by speculators but by serious collectors."