Taxpayers took a loss of at least £230 million from the return of a 6% chunk of Lloyds Banking Group to the private sector, according to a National Audit Office (NAO) report.
The figure, which takes into account the cost of borrowing money to fund the £20 billion bank bail-out in 2009, appears to undermine a claim at the time by Chancellor George Osborne that the share sale in September represented "a profit for taxpayers".
It would suggest that the overall loss on the £20 billion bailout for the bank could be nearly £1.5 billion if the rest of the taxpayer stake is sold off at a similar price - though the NAO report itself did not make such a calculation.
Mr Osborne trumpeted in the autumn that the £6.2 billion Lloyds share sale had resulted in the national debt being reduced by more than half a billion pounds, a claim that was later backed in data from the Office for National Statistics.
This £586 million figure represented the difference between the value for accounting purposes of the shares on the Treasury's books - at 61p - and the 75p sale price.
Today's report by the spending watchdog does not dispute these calculations but does take into account the effective interest paid by the Government to make the original investments in the bail-out.
It also recommends that the Treasury should consider these financing costs when analysing the value to the taxpayer of any future sale.
The report finds that the average rate paid for the shares by the Government of 73.6p was effectively reduced to 72.2p by the fact that it had been paid back some of the money by Lloyds in fees - producing a cash profit of just under £120 million.
But it says that if the cost of financing is taken into account, the sale resulted in a shortfall of £230 million.
However the report, which is broadly positive about the handling of the sale, said: "This shortfall should be seen as part of the cost of securing the benefits of stability during the financial crisis, rather than any reflection on the sale process."
The Government acquired a 39% chunk of Lloyds Banking Group in 2009, in the wake of the financial crisis after it swallowed up troubled Halifax Bank of Scotland.
It returned a 6% portion of the bank to the private sector with a share sale to institutional investors earlier this year.
UK Financial Investments, which manages the Government's stakes in the bailed-out banks, ran the sale in a process which the NAO, in a report today, said was "managed effectively and provided value for money".
The report concludes that a "Tell Sid" style retail sale to individual investors, which was not chosen, would have required six months of preparation and an announcement of the sale date.
This would have limited the ability to go for a disposal of the shares at a time when market conditions offered the best value.
The eventual 3% discount on the price, which was just above 77p at the time of the close just before it took place, compared favourably to the average discount of 4% on the ten last comparable sales since 2008.
The shares were subscribed 2.8 times over but pricing them higher would have required allocating more than 60% to shorter-term investors, risking the future performance of the stock, the report finds.
Following the sale, the share price held steady "lending support to UKFI's decisions on timing and pricing of shares", it adds.
It endorses the use of in-house experts at UKFI rather than buying in consultants for shorter term contracts.
The report also notes that the investment banks who arranged the sale were not paid a fee by the Treasury, amid "strong competition to win such a high-profile mandate", saving around £4.8 million.
They did receive £4.7 million in selling commission, a quarter of which went to UKFI. Legal advice fees were under £100,000.
The report also reveals that the UKFI had held informal talks with large financial investors in 2012 and 2013 over the possibility of selling a significant chunk of Lloyds to such a group.
But such a deal would have been hard to justify, the NAO said, unless the shares could be sold at or above market price.
Amyas Morse, head of the National Audit Office, said today: "The programme of sales of the taxpayers' holdings of bank shares has got off to a good start.
"Sale options were reviewed thoroughly and UKFI looks to have got its timing right.
"The sale took place when the shares were trading close to a 12-month high and at the upper end of estimates for the fair value of the business. Furthermore, the share price in trading after the sale has remained steady."