Space Girl and Bird, which sold for 20 times its estimate, was commissioned by Blur for their Think Tank album cover.
It was sold to a telephone bidder from the US. Earlier, a Banksy self-portrait showing an ape's face fetched £198,000 - five times its estimated value.
The previous record for one of Banksy's works was £102,000, paid for a picture of pensioners bowling with bombs.
Banksy, from Bristol, made his name with stencilled graffiti and subversive stunts in public spaces but fiercely guards his true identity.
Another two of his pieces fetched £75,000 and £32,000 during Wednesday's sale at Bonhams auction house in London.
Bonhams specialist Gareth Williams, said: "We are delighted with today's result.
"The art market for contemporary cutting edge art is booming and Banksy's work has become part of this culture."
Charles Dupplin, an art expert from insurance company Hiscox, said buyers were "fascinated" by the artist.
"Today's auction demonstrates just how much art by Banksy has skyrocketed in value. Clearly he is an artist in huge demand.
"To have the previous record set by the artist broken twice in quick succession reveals how much fascination there is in Banksy by collectors."
The value of contemporary art had increased by more than 11% in the last year, he added.
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