“Thatcher finds a permanent home at No 10”

Mr Brown told Lady Thatcher he intended to commission the painting when he invited her to tea at No10 in September 2007, shortly after he succeeded Tony Blair. She told him she was "honoured."

The painting, which is not yet finished, depicts the Iron Lady at the height of her powers just after the Falklands War in 1982. The portrait is to be hung in perpetuity in her former No10 study, unofficially known as the Thatcher Room, which Mr Brown uses for meetings with foreign dignitaries. It is the first painting of a former Prime Minister ever to be commissioned by Downing Street. Even more remarkably, it will be the only painting of any Prime Minister in No10. Photographs – or photographs of prints – of all former Prime Ministers are hung on the staircase, but there are no original paintings of any of them in the building.

Mr Brown’s decision to commission the £100,000 painting has provoked an angry Labour backlash. One Left-wing MP said last night that the move defied belief. The MP added: ‘Maggie Thatcher is the devil incarnate to many of our supporters who remember how she destroyed the unions and put our people on the dole. Gordon Brown may have forgotten that. Some of us haven’t.’ Downing Street says no public money has been spent on the portrait and the cost is to be met by an anonymous donor. Mr Stone says he does not know who is footing the bill. Mr Brown not only commissioned the work but has taken a keen interest in its progress and where it should be displayed. He asked Mr Stone how the picture was progressing when they met at a 90th birthday party for Nelson Mandela in London last year. Mr Brown and Lady Thatcher, who is now a frail 83-year-old, agreed the painting should show her at her peak.

Postman’s son Mr Stone has painted the Queen, the Queen Mother, Nelson Mandela and Nancy Reagan among a host of world figures and celebrities. He said: "This is the most important painting I have ever been asked to do. It is intended to be a classic, historic portrait and will remain in Downing Street for ever. It is an extraordinary act of homage by the Prime Minister."

In order to portray Lady Thatcher at her peak, Mr Stone studied thousands of photographs, as well as conducting the customary sittings. The 57-year-old artist says, "Lady Thatcher’s looks improved as she got into her stride in No 10."

"She has a beautiful bone structure which became more defined and chiselled. You can see the steeliness and intelligence in her eyes and the inner confidence that came from personal strength. There is no doubt she was affected by the rigours of office. Her style got better too, with more tailored outfits and less fussy blouses."

Mr Stone says the portrait is intended to be timeless. ‘It is not supposed to be freeze-framed. She was influenced by the power-dressing fashion of the day, for example. But I did not want it to look too Eighties. I want her to be centre stage, not her clothes.

"All pictures are a story, they need to have a beginning, a middle and an end. The eye needs to move from the handbag, sweep up towards the body and come to rest on her face."

Lady Thatcher had her own requests. "She said that when she looks in a camera she narrows her eyes and asked if in the portrait they could be opened a little more than photographs usually show."

A stickler for detail, she chose the jewellery and even the buttons she is shown wearing. "She always gets her buttons from the same shop in New York," Mr Stone said.

And she wanted her trademark handbag to be included, though as yet, it appears only in outline. Mr Stone is keen to stress the painting is still a "work in progress." He says: "I want to refine parts, give it a feeling of greater dimension and work on other aspects. It is nowhere near finished, but everything is on schedule for the unveiling."