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The move was completely unexpected and even d’Offay’s own current stable of artists, which includes such eminent names as Gerhard Richter, Howard Hodgkin, Anselm Keifer and Rachel Whiteread, were unaware of the dealer’s plans until after the news broke.

Mr d’Offay is currently talking to his artists and ensuring that their interests will be properly looked after. But informed observers predict a scramble to represent his charges, who are some of the hottest names on the current scene.

Explaining his sudden departure, the dealer said: “I am 62 in January and not getting any younger. There is never a good time to announce one’s retirement but I would rather step down when the gallery is at its height and I feel that now is the right moment. I am in excellent health and will continue to be involved in the art world, offering a support service to artists.”

Since opening his first London gallery in 1965 the Sheffield-born dealer has worked with some of the greatest names of 20th century art, among them Joseph Beuys, Andy Warhol, Jasper Johns and Lucian Freud.

His galleries at Dering Street, off Bond Street, will close at Christmas with the loss of 28 jobs.