One of the earliest paintings by leading Scottish artist Alison Watt has been bought by the revamped Scottish National Portrait Gallery as its first new work since its re-opening.

Watt, born in Greenock in 1965 and a graduate of the Glasgow School of Art, has sold the work from her private collection for £17,500, reduced from its valuation of £25,000.

Watt, known for her acclaimed paintings of fabrics, sheets and materials, abandoned figurative painting some time ago and the self-portrait was painted when she was 20 and ill.

The painting was bought with funding from the Art Fund, the national fundraising charity for art, to celebrate the gallery' re-opening in December 2011.

Watt first came to public attention in 1987, when she won the annual portrait award organised by the National Portrait Gallery in London, and was commissioned to paint the Queen Mother.

In 2000, Watt became the youngest artist to be given a solo exhibition at the Scottish National Gallery of Modern Art, and from 2006 to 2008 was Associate Artist at the National Gallery in London.

Watt's Self-portrait, from 1986-7, was exhibited at Kelvingrove Museum and Art Gallery in Glasgow in 1990.

The National Galleries of Scotland and Watt, who was awarded an OBE in 2008, have been in discussion for some time over having a portrait in their collections.

"I painted it in my third year at art school, and it is one of the first paintings at art school that I actually completed," she said.

"It is interesting to see it here because it is not a painting that I would do now. I had been studying artists such as Ingres, with his very flat perspective which I have always been interested in, and I think you can see that here, it has a very claustrophobic feeling to it."

She added: "I have always been fascinated by portraiture."

Nicola Kalinsky, interim director of the Scottish National Portrait Gallery, said: "It is like getting Alison times two, because it is a portrait by Alison of Alsion, and it is a brilliant way to add one of Scotland's most important painters to the collection. Painted when she was only 20 years old, it is an extraordinary document of a very important artist."

Stephen Deuchar, director of the Art Fund, added: "Like the museum, Alison Watt is deeply embedded in her Scottish context yet also of international stature."