The head was knocked off using a metal rope support stanchion, according to a statement from the Corporation of London.

The incident happened at 1530 BST on Wednesday.

The Lord Mayor of the City of London, Alderman Michael Oliver, described the incident as an "act of wanton vandalism".

Whatever one's views on Baroness Thatcher's politics, she is a unique and important part of the recent history of our country

Alderman Michael Oliver

The damaged statue has now been withdrawn from view.

Alderman Oliver, who is in Budapest on an official trip promoting UK financial services, said: "This act of wanton vandalism is utterly deplorable and I find such behaviour deeply saddening.

"Whatever one's views on Baroness Thatcher's politics, she is a unique and important part of the recent history of our country.

"That is why the House of Commons - across all parties - commissioned the statue.

"That is also why the Corporation of London was delighted to agree to house the statue in our new art gallery before taking up a permanent home in the Members' Lobby at Westminster."

'Marvellous' momument

Labour MP Tony Banks, chairman of the Advisory Committee on Works of Art in the House of Commons, said: "Although the statue of Baroness Thatcher ranks among our most controversial commissions, acts of vandalism against works of art can never be tolerated in a civilised society."

A spokesman for Lady Thatcher said there would be no statement from her.

Lady Thatcher unveiled the statue last May, describing it as "marvellous".

She said at the time: "It is a little larger than I expected but that is the way to portray an ex-Prime Minister who was the first woman Prime Minister."

'Big handbag'

The white marble statue, sculpted by Neil Simmons, was 8ft tall, including the plinth, and, according to Lady Thatcher, portrayed her "for posterity in a way which pleases me very much indeed".

She also noted with satisfaction that it included "a good big handbag".

Under new rules, statues of former prime ministers who are still alive can be displayed at Westminster after three terms have passed since the subject was in power, as long as that is at least 12 years.

The statue was expected to move to Westminster after the next general election.

Sculptor Mr Simmons, 44, said he was "deeply saddened".

"It is tragic that something I devoted so much time and energy to should have been damaged by a few seconds of mindless violence," he added.

A man has been arrested by City of London Police in connection with the incident.