Fergus Gambon, department director of British ceramics at Bonhams told ATG he was moved to tears by his first sight of the work in an English private collection last year.
"My heart stopped. I knew that the only known example of the model was in the Ashmolean Museum in Oxford, regarded as a jewel in the crown of the ceramics collection there. No other example was recorded. Yet here was another - and somehow even better. I was immediately struck by its radiance and beauty."
The identities of the subject and the sculptor of this iconic 8in (20cm) model made in the late 1740s have been much discussed by scholars and collectors.
Head of a Laughing Child is sometimes said to represent Sophie Roubiliac, daughter of the sculptor Louis François Roubiliac (1702-62). Sophie was the goddaughter of Nicholas Sprimont, proprietor of the Chelsea porcelain factory.
In contrast to the Ashmolean example that is decorated (probably at a later date) in polychrome enamels, Bonhams' new discovery has been left in the white as the potter intended and as fashion c.1748 would have demanded. It was slip cast as a single piece.
Mr Gambon added: "The child's smiling face and thick, curly hair are beautifully modelled, beneath a glaze as smooth as silk. The result is a piece of sculpture of great delicacy and pathos."
While Bonhams have published a 'refer to department' estimate - in saleroom terms at least this is an incomparable object - he believes the head has the potential to break the world record price for early English porcelain at auction, which stands at a premium-inclusive £223,650 paid for a Chelsea hen and chicks tureen at Christie's in 2003.