The auction of a portrait of Chairman Mao Zedong was cancelled on Friday after the owner said he might donate it to a Chinese museum.

The painting, which served as a model for portraits hung on Beijing's Tian'anmen Rostrum for decades, was scheduled to go under the hammer at Huachen Auction Co Ltd on June 3.

But the plan led to intense online criticism when it was revealed a week ago, with many people saying the portrait was a national treasure and should not be sold.

Following the debate, the auction house put up a notice on its website on Friday saying that it was not going to sell the portrait following "advice from the government."

It added that the owner of the painting was in discussion with a number of museums in China about donating the artwork.

The painting, owned by a Chinese American, was expected to fetch 1-1.2 million yuan (US$120,000-150,000) at the upcoming auction in Beijing.

Created in the 1950s by portraitist Zhang Zhenshi, the painting is 91 centimetres long and 69 centimetres wide.

Zhang died in 1992 at the age of 78.

Some netizens suggested a public museum in China should have the piece.

"The portrait is the most important memorabilia from a specific period in history," said netizen Lao Wang on Sina.com.

"We were young at the time and cherished a great passion for Chairman Mao."

"Red Art," art works created between the 1950s and 1970s covering revolutionary topics, is currently popular in China.

One piece, an oil painting by Shen Yaoyi in 1978, entitled "Heart and Blood," was sold for 6.27 million yuan (US$784,000) at an auction in May 2005 in Beijing, a record for a contemporary Chinese oil painting.

The previous record was also set by a piece of "Red Art" "Chairman Mao Goes to Anyuan," an oil painting by Liu Chunhua in 1967, which was auctioned for 6.05 million yuan (US$756,000) in October 1995.