The works, including many rough sketches, but also nine elaborate collages from the artist's Cubist period in the first years of the 20th century, have turned up in the hands of a retired electrician in the south of France.
Although the electrician claims that the works were given to him by Picasso and his wife, the painter's heirs have started a legal action for "receipt of stolen goods" against "X" or persons unknown. The treasure trove, which includes watercolours, gouaches, lithographs and rare landscapes, has been valued at around €80m (£67m).
The possibility of an elaborate hoax, or fraud, has been examined by experts and dismissed, according to Libération, the French newspaper that revealed the find. The sheer variety of different Picasso styles, from different periods, would have been impossible to copy so convincingly, the experts believe.
The greatest discovery may be the nine paper collages in Picasso's pre-1915 Cubist style. These alone have been valued at €60m. Although never seen before, they may be part of a series from 1912 previously believed to have been lost or destroyed by flooding. None of the 271 works, including more than 200 sketches and doodles in notebooks, are listed in the catalogue of Picasso's work established after his death in 1973.
The works have been confiscated by the French agency which combats art theft – L'Office Central de Lutte Contre le Trafic des Biens Culturels (OCBC) – pending further investigation and legal proceedings.
The existence of unknown Picassos first came to light 11 months ago when the retired electrician, Pierre Le Guennec, 71, wrote to the painter's son, Claude Picasso. He enclosed 26 photographs of the apparently unseen works and asked Mr Picasso, 63, to authenticate them as administrator of the artist's estate. Other letters and photographs followed until, finally, Mr Le Guennec and his wife brought a suitcase full of notebooks and artworks to the offices of the Picasso Administration in Paris in September.
Mr Le Guennec said that Picasso, and his last wife Jacqueline, had given him the works after he had worked on alarm systems at a succession of the artist's villas in the south of France in the late 1960s and early 1970s. Picasso's six heirs have challenged this story and brought a legal action for "receipt of stolen goods" that does not mention Mr Le Guennec by name.
Picasso was prodigiously productive and often gave small works to friends, "but giving things away on this scale, that never happened. It, frankly, does not add up," Claude Picasso told Libération yesterday. "Pablo Picasso was a generous man but he dated, signed and dedicated all his gifts, because he knew that people often sold them on."
The works in the "Le Guennec" collection are unsigned but some pieces are numbered, as if they might have once been part of a chaotic and incomplete cataloguing of Picasso's sketches, studies and unsold works begun in 1935. Most of these works remained stored in Paris until Picasso's death. It is unclear how some of them could have reached the south of France.
Mr Le Guennec was briefly placed in custody and questioned by police last month, but stuck by his story.
Mr Le Guennec's wife, Danielle, said last night: "This was a gift . We aren't thieves. We didn't do anything wrong." She said that Claude Picasso had "put a knife in our back... accused us of theft. He'll have to prove it."
Claude Picasso said that he, and the painter's other surviving heirs, did not wish to make money from the finds, but wanted to make sure that they were kept together and studied by art historians, so that they can "take their rightful place in my father's life and work".
Apart from the collages and the 200 doodles and drawings, the collection includes portraits of Picasso's first wife, Olga; studies for The Three Graces of 1923 and fragments from his Blue Period. There are also several rare examples of Picasso watercolour landscapes.
Picasso in numbers
£70m Amount Picasso's Nu au plateau de sculpteur sold for earlier this year. It is the most expensive piece of art sold at public auction.
20,000 The estimated number of works Picasso produced during his lifetime.
11 The number of art thefts of works by Picasso over the past decade.
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