THE National Galleries of Scotland last night lost a tug-of-war with Westminster City Council over who should keep a world-famous Henry Moore sculpture.

Victory was handed to the city council by deputy Prime Minister John Prescott in a landmark planning ruling which has implications for thousands of property owners across the country.

The work, Reclining Figure, which is valued at more than #1m, was originally placed in the Grade Two-listed Time & Life Building in New Bond Street, London.

However, it was moved by the occupiers and is currently on display in the National Galleries of Scotland in Edinburgh.

In his role as Secretary of State for the Environment, Mr Prescott decided the work was an integral part of the Time & Life Building and should not have been removed.

Mr Prescott, whose ruling follows a long planning battle by Westminster involving two public inquiries and a High Court challenge, also issued a two-month deadline for the sculpture's return.

Last night, Mr Timothy Clifford, director of the National Galleries of Scotland, said his initial reaction to the news was sadness because the Henry Moore sculpture ''looks so well with us''.

Mr Clifford said the work had been removed from the Time & Life Building in London because of the danger it could be vandalised.

He added: ''It was not thought to be integral to the building. However, it was never technically ours.

''We are extremely badly off for Henry Moore. If anyone else has one, we would like to borrow it.''

As part of the same planning decision, the deputy Prime Minister ruled several other works must also be returned to the building.

They are a #400,000 painting by Ben Nicholson, titled The Spirit of Architecture, a symbolic clock called the Astolabe, made by the Ironside brothers, and a Geoffrey Clarke sculpture called The Complexities of Man.