The 203 carat Millennium Star is the second biggest flawless diamond. The newly found stone could produce a stone even bigger.
The diamond is expected to attract furious bidding from buyers worldwide and could fetch up to £15m.
A spokesman for the mining house which made yesterday's find, Brett Joli, said the diamond was being rushed to a bank vault in Johannesburg and would be kept there for a couple of days "until we calm down and decide what we are going to do". A security company was being hired to protect the precious stone.
The mining company which made the find has not been identified.
The South Africa Broadcasting Corporation said the stone was said to be twice the size of the Cullinan diamond.
Fred Cuellar, the founder of Diamond Cutters International and author of How to Buy a Diamond, said he first heard about the find a few days ago. "I get a phone call when any rare stone around the world is found and when I heard about this one it was stunning news.
"It caught everybody in the diamond industry offside. There will be a lot of mad bidding from a lot of private individuals as to who is going to buy this stone."
The Cullinan, which was found near Pretoria more than a century ago, was until recently acknowledged to be the largest cut diamond in the world, weighing in at 530.20 carats. In 1985 it lost the record to the Golden Jubilee, which was found in the same mine as the Cullinan and weighed 545.67 carats.
In its rough state the Cullinan weighed 3,106.75 carats. It now forms part of King Edward's sceptre and is in the Tower of London.
The Cartier diamond, famous as a gift from Richard Burton to Elizabeth Taylor, weighed a mere 240.80 carats rough and 69.42 carats cut.
Mr Cuellar said the most important information about the latest find was yet to be forthcoming, including whether it is colourless. "The reported size of the stone is accurate, but there are all these other factors we still don't know and what matters now is how wide, how clear and how well cut it will be.
"Will this diamond rank above the best quality diamonds in the world? I can tell you right now, no. But in as far as the list of the largest diamonds ever found in the world goes, would it make that list? Yes it would."
He said the first seven people who looked at the stone thought it was industrial grade, but that view has changed and it now appears to be a stone that will be cut into a piece of jewellery.
The quandary facing the owner of the diamond now is how best to cut the stone he said. "The thinking usually is with these types of things, we know how big we could get it but we don't know how much it will hurt us on the quality side."
The Cullinan, also known as the Star of Africa, was thought by some to be part of a larger stone which still lies somewhere undiscovered.
There will be interest in who made the find and how they will be rewarded. The black miner who discovered the Excelsior, said to be the second largest uncut diamond ever found, received a horse and saddle, and a sum of money.
Rock stars
· The Cullinan Diamond was discovered in 1905 and at 3,106 carats was the largest gem-quality rough diamond ever found. Cullinan I, or the Great Star of Africa - at 530 carats formerly the largest cut diamond - was one of the 105 gems cut from it.
· The Koh-i-noor is part of the British crown jewels. It originated in India but seized by Britain as a spoil of war in 1849. The diamond supposedly brings good luck to female owners and misfortune or death to any male who wears or owns it.
· The Hope Diamond is a large (45.52 carat), deep blue diamond. It is legendary for the curse it supposedly puts on whoever possesses it. Previous owners include Kings Louis XV and XVI and Marie Antoinette.
See more: http://www.guardian.co.uk/world/2007/aug/28/southafrica.davidberesford
