A London jeweller smashed a 20-year-old world record today by paying more than a million dollars per carat for a flawless blue diamond.

Alisa Mousaieff bought the gem for £3.91 million at an auction in Hong Kong after obsessively watching the rare blue gem change hands for more than two decades.

The diamond went for $1.32 million (£650,000) per carat beating the previous record set by the “Hancock Red” diamond, which fetched $926,000 (£456,000) per carat in New York in April 1987.

It will be brought back to London but not for display to the public. The stone will be locked away in the vaults at Moussaieff Jewellers in Mayfair. Ms Moussaieff, the owner, explained that it will be shown only to “legitimate hard-nosed business clients”.

While not a large diamond, the most expensive pound for pound gemstone ever sold is so valuable because of its immaculate cut and vivid blue colour. The blue hue is a result of trace amounts of boron in the stone's crystal structure.

Pink and red diamonds can be mined in several locations across the world including Brazil, India and Australia, but blues are now mostly found at just one site on earth - at a mine in South Africa.

Ms Moussaieff said that rarity combined with the lustre of this particular stone made it irresistible.

“It seems the blue diamond mines are extinct – nothing is coming out from mother earth any more. I have stopped seeing any from South Africa,” she said.

“It’s the colour, the purity and "the life" of the stone. The life of the stone is the water, the shimmer inside the diamond. Its cut and the number of carats may appear on the certificate, but the life you have to see.

“Size is not always what matters, what matters is quality.”

Blue diamonds have long captivated the rich and powerful. The famous "Hope Diamond", a 45.52 carat grey-blue stone, was passed down through the ages by King Louis XIV of France, Marie Antoinette. It now rests in the Smithsonian Institute in Washington D.C.

The Sultan of Brunei is thought to have snapped up another massive blue diamond when it surfaced briefly on the market in the 1980s.

The jewellery sale by Sotherby’s in Hong Kong raised more than £20 million, including £640,000 for the "Irving Berlin" emerald, a long 47.60 carat necklace previously owned by the celebrated US composer and lyricist.

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