The £3.3m sketch, L'Olivette, will be given back "within weeks" by Berlin's National Gallery to Gerta Silberberg, an 85-year-old widow from Leicester.

Mrs Silberberg says she is "very pleased" at the outcome but has not decided what to do with the sketch. She has previously said it brings back bad memories for her.

The Jewish people were victims of widespread persecution

Mrs Silberburg's Polish father-in-law, who died in the holocaust, was a wealthy Jewish industrialist.

He was forced to sell more than 100 pictures at knock-down prices at one of the many "Jew Auctions" in the 1930s. They would be worth an estimated £20m at today's prices.

The decision to return the painting was made by the Foundation for Prussian Cultural Heritage, the umbrella group for museums in and around Berlin.

The Foundation voted on Friday to give its newly-elected president, Professor Klaus-Dieter Lehmann, the authority to negotiate returns directly with pre-war owners or their heirs.

This was to avoid lengthy court cases and get around deadlines for making claims that have long since passed. "The expiration of legally-set deadlines can't be a reason that injustices are not set right," Prof Lehmann said.

This £5m Tieleman Roosterman portrait was looted from the Rothschilds

The decision is expected to set a precedent for similar claims on looted artwork held in the former Eastern Bloc.

The German government last year asked all German museums to look in their depots for artwork that may have come from persecuted Jewish families.

Museums in former West Germany returned most such works during the 1950s, but former East Germany's communist officials blocked efforts to trace ownership or file claims.

Since the collapse of the Berlin Wall, the Jewish Claims Conference in Frankfurt, which handles Holocaust-related restitution cases, has identified about 1,000 paintings and other formerly Jewish-owned artworks that ended up in Berlin or in museums across the former Eastern Bloc, including Russia.

The Red Army transported many works from Berlin to the Soviet Union, including a Cezanne drawing originally in the Silberberg collection.

Anja Heuss, an art historian with the Jewish Claims Conference, said the drawing has been traced to a museum in St. Petersburg, but Russia has so far refused to recognise any claim for restitution.