It may be champagne for breakfast this morning for the comrades at the Communist Party of Britain after a £20.5 million windfall from the decadent West.

Anita Halpin, the party chairwoman, has picked up a fortune as the world’s leading arts dealers broke spending records.

The veteran Marxist from Bow, East London, is now one of the country’s wealthiest women after selling an expressionist painting that had been seized by the Nazi’s from her Jewish grandmother.

The Berliner Strassenszene (Street Scene, Berlin) by Ernst Ludwig Kirchner sold for twice its pre-sale estimates at Christie’s in New York on Wednesday evening. It was bought on behalf of the Neue Galerie in New York.

The 200cm by 150cm (78in by 59in) canvas was sold during frenzied bidding by American billionaires and Russian oligarchs as the auction’s 84 lots went for a record total of $491,472,000 (£257,800,000).

About 10 per cent of the works had been returned to the heirs of collectors persecuted during the Nazi era. They included four Gustav Klimt paintings, which fetched a total of $192.7 million. A Picasso owned by Lord Lloyd-Webber’s art foundation, valued at $60 million, was withdrawn because of litigation over its history.

A source at Christie’s confirmed last night that Ms Halpin was the seller. The 62-year-old member of the TUC’s general council, who is treasurer of the National Union of Journalists, has been in negotiations over the ownership of the painting since 2004. The canvas had hung in the Brücke Museum in Berlin for 30 years. It was given to Ms Halpin after her lawyers said that the Gestapo had pressured her grandmother, Thekla Hess, to hand over her art collection in 1936.

Mrs Hess and her husband, Alfred, had been leading supporters of German Expressionists in the Twenties and Thirties. The return of the painting was, coincidentally, approved by Thomas Flierl, Berlin’s Senator for Cultural Affairs and a member of the PDS party, which succeeded the East German Communists.

The decision was seized upon by the growing opposition in Germany to the restoration of looted Nazi assets. Critics who have challenged Ms Halpin’s legal and moral right to the painting say that Mr Hess was made bankrupt and his art collection had been sold out of financial necessity. Lutz von Pufendorf, the head of the Society for the Promotion of the Brücke Museum, is said to be planning criminal proceedings over the deal.

Ms Halpin’s lawyers have not ruled out seeking restitution of other lost works from the 4,000-strong collection.

There was no sign yesterday of a spending spree at the Communist Party’s shabby headquarters in Croydon, South London. But perhaps the party has bigger plans. On Monday Ms Halpin called on trade unions to back John McDonnell, a veteran left-winger, as the Labour Party’s next leader.

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