Gone for a song: The lost Van Dyck worth a fortune

Auction house missed master's work – even though it had his name on

A leading British art dealer has discovered a highly-significant and previously-unknown oil sketch by Van Dyck linked to his most important English painting, the portrait of Charles I and his family in the Royal Collection.

It is the Flemish master's first thought for the monumental painting for which he was promised a princely £100 in 1632, the year he was appointed court painter. The artist had arrived in London just months earlier and began painting Charles I, Queen Henrietta Maria and their two eldest children, Charles, Prince of Wales, and Mary, Princess Royal.

As the preparatory sketch, it is all the more important because it is likely to have been created in front of the Royal Family itself, before the master worked up the final composition in his studio.

Leading Van Dyck experts who have now seen it have expressed excitement. Dr Christopher Brown, director of the Ashmolean Museum in Oxford, said: "It is a very significant discovery."

It was spotted by Julian Agnew, the Old Masters specialist dealer, in a small auction in Austria. The catalogue entry dismissed it as the work of a mere "follower of Van Dyck", and it was sold to Mr Agnew for a fraction of its true value, which is close to £1m.

Mr Agnew was so convinced of its significance, even from a photograph, that he went to Austria to see the actual image. "It's really important," he told The Independent, noting that the Austrian auctioneer had overlooked its potential, even though it had a 19th-century label saying it was by Van Dyck: "They must have just looked at it briefly. Perhaps they were not so familiar with what Van Dyck sketches look like."

Compared with the final painting, the sketch – an oil on oak panel – offers a unique and intimate insight into the family life of the Royal Household.

It reveals substantial differences from the finished picture. The figure of Prince Charles is shown with his hands on his father's left knee and does not directly face the spectator, Mr Agnew pointed out: "In the finished picture, he is shown on his father's right side and his posture is in reverse to that shown in the sketch, while his gaze is now directed frontally. The space is occupied by a puppy."

He added: "The gaze of the Queen is directed more closely to her husband and her facial expression seems full of the emotion of what was reportedly a love-match as well as an arranged marriage. Most important of all, in the sketch the baby princess lies asleep in the crook of her mother's left arm, while in the finished picture she stands awake on the Queen's knee."

The column to the left of the King's head in the sketch is also moved to the right to allow space for the distant view of Parliament House, Westminster Hall and possibly the Clock Tower on the Thames. Mr Agnew said these changes reflect how the composition developed from an informal portrait to one of status and propaganda. He unveiled it yesterday at TEFAF, Maastricht, the leading art and antiques fair.