Portrait in hoard sent to auction revealed to be £3million Velázquez

It arrived for auction with a bunch of paintings by a forgotten British artist worth a few hundred pounds apiece.

But to the astonishment of the owner, experts now agree a portrait of a man in a ruff is by 17th-century Spanish master Diego Rodriguez de Silva y Velázquez.

They spotted the work was different from the rest of the consignment of works by Matthew Shepperson as soon as it arrived at Bonhams' Oxford office.

The London headquarters was quickly alerted, and months of research and consultation with experts in Dublin and Madrid have now confirmed the painting is a rare discovery of work by the Spanish court painter, Bonhams announced today.

By Shepperson, a 19th-century jobbing artist at Buckingham Palace, the work would have been worth perhaps £300.

The new attribution means it could fetch £3million. Andrew Mackenzie, head of Bonhams' Old Masters department, said: "The discovery of this lost treasure is a once-in-a-lifetime experience and it is tremendously exciting to be able to bring it to the world's attention.

"We expect there to be great interest from around the globe as works by this master so rarely come to auction." The last Velázquez to be sold was in 2006 and only four remain in private hands.

It is thought possible that Shepperson was a modest collector.

"Evidently Shepperson had a good eye and it would seem highly likely that he acquired the picture as an example of portraiture of the highest calibre," Mr Mackenzie said.

A spokeswoman for the auction house said the owner, who wished to remain anonymous, had inherited a number of works by Shepperson along with the Velázquez.

The sale "would make a big difference to his life".

Dr Peter Cherry of Dublin University, one of the world's top authorities on Velázquez, said: "The style and technical brilliance of the representation itself betrays its author."

The identity of the sitter is not known but could be Juan Mateos, the master of hunt for Velázquez's patron, King Philip IV of Spain.

The work will be the highlight of an Old Master sale on December 7.