The US has returned an Edgar Degas painting stolen 37 years ago to French authorities.

The painting was handed over to the acting French ambassador to the US, Francois Rivasseau, yesterday.

It was rediscovered recently before it was due to be auctioned in New York City. Court papers said the seller did not know it was stolen.

Authorities said Degas painted Laundry Woman with Toothache in the early 1870s. A collector donated it to the French government and it was registered with the Louvre Museum.

In 1961, the Louvre lent the painting to the Malraux Museum in Le Havre, Normandy. In late 1973, a still-unknown thief pulled it off the museum wall and slipped away.

Sotheby's had given the small oil portrait of a young woman holding her jaw an estimated value of £218,000-£281,000.

Earlier this year Sotheby's featured the painting in the catalogue for a sale of impressionist art. A Malraux employee spotted the listing and notified Sotheby's, which immediately pulled it from the auction.

Stencilled on the back of the canvas but hidden by the frame was RF 1953-8 - shorthand for it being the eighth work of art acquired by the French Republic in 1953.

Sotheby's officials said that before the auction, Sotheby's had checked to see if the piece was listed on the London-based Art Loss Register - which tracks stolen, looted or missing art - and similar databases. But they said they did not find it listed.