A painting stolen from a London home in 1979 and which ended up in the collection of late Italian fashion designer Gianni Versace has been returned to its original owners, Britain's Art Loss Register said on Monday.

The work by 18th century German artist Johann Zoffany had been billed as the star lot in a Sotheby's auction of the contents of Versace's Lake Como villa last year, but it was withdrawn at the last moment.

A direct descendent of the subject of "Portrait of Major George Maule" contacted the Art Loss Register, which tracks lost and stolen art and antiquities, and the ALR in turn contacted Sotheby's.

"What could have been a protracted legal battle between two very well financed European families and their copious sets of lawyers has been amicably settled by the Art Loss Register's art mediation team," the ALR said.

Although the terms of the settlement between the two families remained confidential, the ALR's Christopher Marinello said: "There is no doubt that Gianni Versace had no knowledge that this painting was stolen when he purchased it in the 1980s.

"This portrait does ... hold particular sentimental value to the ... heirs and the Versace family were extremely gracious in their willingness to compromise in seeing its return."

The Sotheby's sale in March 2009 raised 7.4 million pounds, nearly three times the pre-sale estimate, despite the withdrawal of the Zoffany painting.