The Union Flag from the battle of Trafalagar that sold at Charles Miller’s sale for £320,000.

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Consigned by a vendor from Australia, the buyer has been revealed as an American who has been collecting for the last four decades and hopes to work with the relevant British authorities so that the flag can be returned to the UK to go on display.

The 7ft 4in x 11ft 9in (2.23 x 3.58m) flag was sewn on board HMS Spartiate, which, like all the British ships in the battle, was ordered by Nelson to be flown from the jack staff, to aid identification and prevent loss by friendly fire.

After the battle, the crew awarded the flag to Lieutenant James Clephan in recognition of his courage.

It had passed down through his family and his descendant, who lives in Australia, decided to consign the flag to auction at the special Trafalgar Day sale held by maritime specialist Charles Miller Ltd on October 21.

With little precedent to go on, Mr Miller opted for a fairly low-key £10,000-15,000 guide. But this is the type of object the value of which really gets decided on the day of the sale.

An unnamed national institution expressed interest in the piece quite early on, but interest grew after the considerable level of press coverage and, by sale day, there were bids on the book up to £50,000.

"I thought it might make up to £120,000," Mr Miller told ATG.

In the event, there were several bidders up to £150,000, after which it was a straightforward battle between a man in the room taking bids over a phone and the successful purchaser, on the auctioneer's phone.

The buyer's premium was 20 per cent premium.

By Anne Crane