EARLY hopes that a Raphael masterpiece may be kept on British soil have been dashed after it emerged the North-East owner may still refuse to sell it to the National Gallery.

The Duke of Northumberland - one of the richest men in the country with estimated assets of £300m - claims he may be sold short by £8m if he accepts a £21m offer for the Madonna of the Pinks.

He had been about to sell the painting to the Getty Museum, in Los Angeles, for £35m until the Government halted the export to allow the National Gallery to match the offer.

The gallery, which was awarded £11.5m from the Heritage Lottery Fund for a fighting fund, has argued that after the Duke paid an expected £14m in tax on a sale to the US, their offer was the same.

But the duke, who says he is struggling to make ends meet and needs the cash for repairs to Alnwick Castle and his estate, disagrees.

He says his advisors believe a sale to America would incur tax of only about £6m.

The Duke's spokesman, Philip Gregory, said last night: "We are awaiting a formal offer from the National Gallery."

He said: "There remains another offer on the table and the Duke has to seriously consider whether this is still worth the same as £35m."

Mr Gregory added: "The Duke is sacrificing one element of his collection to maintain and conserve the remainder of his collection and the estate. He is responsible for 200 listed buildings."

A National Gallery spokesman said last night: "We have received independent legal advice that the sum that constitutes a matching bid required to keep the painting in the UK is £21m.

"The gallery has now reached this sum through the Heritage Lottery Fund's unprecedented generous grant and £9.5m raised as a result of our public appeal."

He said it remained for the Department of Culture, Media and Sport to determine whether the £21m did constitute a matching offer.