Pedestrians walk past street art in Hosier Lane, Melbourne, where a work by British graffiti artist Bansky was painted over last week. (Mick Tsikas/Reuters)

Officials in Melbourne, Australia, are red-faced after a city cleanup crew painted over street art by internationally renowned artist Banksy.

Melbourne has a policy of encouraging street art and Banksy had created several murals during a visit to the city in 2003.

But the city also has a problem with gangs tagging walls and public property, and it sent a crew last week to clean up a downtown laneway.

The overzealous workers painted over the tags, but also the Banksy mural.

The work by the elusive British artist, who does not want anyone to know what he looks like, was a stencil of a parachuting rat wearing aviator goggles.

"Apparently what happened was that the residents requested that the laneway be inspected and cleaned because it was in pretty awful condition in terms of tagging, and also a whole lot of other people had dumped rubbish [there]," said city CEO Kathy Alexander.

"Unfortunately the contractors were not made aware by us that that was an important piece and unfortunately that means the piece is gone."

Lord Mayor Robert Doyle says it is difficult to protect street art, which is vulnerable to others painting it over. He called the gaffe an "honest mistake."

In Britain, Banksy's work has been defaced by vandals and ordered painted over by some local councils who do not want to encourage graffiti artists. However, his works have sold for more than $1 million at auction.

With files from the Australian Broadcasting Corp.