The Victoria Cross won by a naval hero who allowed his ship to be torpedoed so he could lure a German U-boat close enough to sink it today sold for a world record £840,000.

Vice Admiral Gordon Campbell's decoration - the highest award for valour - stormed past its estimate of £300,000 to go for a hammer price £700,000.

The First World War hero's cross was bought by his aristocratic relative, Baron Lorne Thyssen-Bornemisza, with fees bringing the added on the total price to £840,000 to beat the previous £678,000 VC auction record.

Admiral Campbell earned the gong for an incredible ruse in which he steered his ship - the HMS Farnborough - into an enemy torpedo a century ago.

Vice Admiral Gordon Campbell lured a German U-boat close to his ship after allowing his vessel to be hit by a torpedo, before sinking the enemy submarine

After his ship sustained moderate damage from the impact, he then ordered his crew to look panicked and abandon ship.

The German captain of U-83 observed the 'emergency' through his periscope and steered the submarine to within 30ft of the ship to finish it off and pick up any survivors.

At that moment Admiral Campbell gave the order for his remaining crew to open up the ship's hidden guns and they fired off 45 shells at point black range.

The U-boat captain, Bruno Hoppe, was decapitated when he was hit as he climbed out of the conning tower.

King George V decreed Admiral Campbell should be awarded a second VC but he declined. Today his medal sold for a world record price at auction

The submarine sunk with the loss of 35 of its crew. There were two survivors but one of those later died of his wounds.

Admiral Campbell, whose grandfather was Sir John Campbell, the 7th Baron of Ardnamurchan and Airds in Argyll in Scotland, received the VC for the action on February 17, 1917.

Incredibly, he successfully used the same tactic twice more to sink two German submarines later on in the First World War.

King George V decreed Admiral Campbell should receive a second VC but he declined, going on to be awarded the Distinguished Service Order three times during the war.

The HMS Farnborough engaged in a fake evacuation and the U-83's captain drew closer to finish the ship off and pick up survivors. Pictured is the first sinking of a German U-boat by a Q ship the year before Admiral Campbell's ruse

After his death in 1953, his medals were left to his only son David, a priest. He in turn bequeathed them to the Fellowship of St John Trust Association which auctioned them today.

Baron Lorne Thyssen-Bornemisza says he plans to offer the medals to a museum for display.

'These medals have enormous historic value for the UK, as well as personal value to me and my family,' he said.

'Behind every medal is a human story, and an example to generations to come. Gordon Campbell was an old-fashioned hero who was recognised for conspicuous gallantry, consummate coolness, and skill in his command of "Q" Mystery Ships, decoys for German U boats.

The submarine sank, leaving just two survivors, as the Q ship employed a ruse against the enemy. The 'mystery' ships were decked out with hidden weapons and the first successful deception was in 1916 when the U68 (pictured) was sunk

'I am offering the medals for display in a UK museum, where I hope as many people as possible will have the opportunity to learn about Gordon and his incredible story.

'And I am most grateful to the team at Morton and Eden for bringing this wonderful collection to auction.'

Before today the British auction record for a Victoria Cross was £408,000.

The trust plans to spend sale proceeds on missions they are involved with across the world, including hurricane relief in the Caribbean.

David Kirk, of London auctioneers Morton and Eden, which sold the archive, said: 'We are absolutely delighted with this record sale.

'We thought it would exceed its pre-sale estimate but never expected to make what it has.

'Gordon Campbell was both a national hero and a true 'celebrity' of the Great War.

'In our opinion this historic VC group is one of, if not the single greatest naval VC group of the 20th centiry and is without doubt of the highest national importance.

Staff member Nancy Dillon-Malone holds Vice Admiral Gordon Campbell's full set of medals. The war hero turned down a second Victoria Cross out of modesty

'The fact that Campbell was nominated by his fellow officers for a second Victoria Cross, but out of modesty declined, places him amongst the very greatest names in British military history.

'It has been a great privilege for us to be able to offer such a fine and historic group.'

Admiral Campbell joined the Royal Navy as a cadet in 1900 and by the age of 31 reached the rank of commander.

In 1915 he was given command of HMS Farnborough, a Q-ship which was an old merchant vessel decked out with hidden guns.

The Q-ships were decoys used to tempt German vessels closer in order to attack them.

Admiral Campbell took risk to a whole new level when he allowed his ship to be torpedoed by a German U-boat

But Admiral Campbell's ruse on February 17, 1917, took the risk to a whole new level, by steering HMS Farnborough directly into a torpedo.

He prevented a direct hit on the engine room by changing course at the last moment.

The well-trained crew then went through the pantomime drill of piling into the lifeboats while the ship began to list.

The London Gazette citation for the VC reveals just how close the boats came to one another.

'The submarine was observed on the starboard quarter 200 yards distant, watching the proceedings through his periscope,' it reads.

'He ran past the ship on the starboard side so closely that the whole hull was visible below the surface.

'The enemy came down the port side of the ship, and fire was withheld until all guns could bear at point blank range.

The Victoria Cross sold for a world record £840,000. The previous VC auction world record was £678,000

'The first shot beheaded the captain of the submarine as he was climbing out of the conning tower, and the submarine finally sank with conning tower open and crew pouring out.'

Farnborough started to sink from the torpedo damage and Campbell issued the message: 'Q5 slowly sinking respectfully wishes you goodbye.'

Luckily, the message was picked up and within an hour a destroyer and sloop sailing boat arrived to tow the stricken ship back to land.

Admiral Campbell died in 1953 aged 67 and is buried at All Saints church in Crondall, Hampshire.

As well as the VC and DSO with two Bars, Admiral Campbell's stunning medal set also includes France's prestigious Legion d'Honneur Chevalier's badge and the Croix de Guerre, 1914-1918.

The British record price achieved for a Victoria Cross at auction stood at £408,000 for the one awarded to Lieutenant John Grant in 1905 for the British campaign in Tibet.

The all-time auction record was £678,000 for the VC won by Private Edward Kenna for an action on New Guinea in the Second World War. It sold at auction in Australia.