The mural, located about 3 miles from government listening post GCHQ, has been a source of controversy ever since it appeared.
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The Spy Booth mural showed three 1950s-style agents, wearing brown trench coats and trilby hats, using devices to tap into conversations at a telephone box.
The mural appeared overnight in April 2014 on the side of a house in Cheltenham, just three miles (4.8 kilometres) from Government Communications Headquarters (GCHQ), the British intelligence and security agency whose telecoms data collection was exposed by Edward Snowden.
But pictures have now emerged on social media showing the wall stripped back the brickwork, and rubble lying around the phone box.
The removal of the work will come as a devastating blow to the Cheltenham residents who have campaigned tirelessly to protect the artwork over the past couple of years and had thought the mural was safe thanks to a decision by Cheltenham Borough Council last year, which granted the artwork retrospective planning permission and elevated the building to listed status.
The council said they were unaware of any damage to the mural.
The mural had been the target of vandals since it appeared on the side of the dilapidated building which, along with the artwork itself, was granted listed status but urgently needed fix work to halt its deterioration. “I will have a look at what the situation is, certainly”.
The house itself also went on the market in January this year for £210,000.
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Speaking at the time, Mike Redman, director of environment at Cheltenham Borough Council, said: ‘The owner is carrying out works to his property in accordance with the “urgent works notice” issued by the council to stop further deterioration of the Listed Building, make it weatherproof and secure the safety of the public by removing the risk of falling render’.
