The medal - the highest award for gallantry "in the face of the enemy" to members of the British armed forces - was awarded to Cpl Sanders for fighting off repeated German attacks for 36 hours on July 1 1916, despite being hugely outnumbered.
The medal with his Military Cross, which he won later in the war, and other medals, were sold to Lord Ashcroft, the international businessman who has the world's largest collection of VCs at London auction house Dix Noonan Webb this morning.
The Sanders decorations and medals will be going on public display at the Imperial War Museum in London where all of Lord Ashcroft's VC collection is on show.
A spokesman for Dix Noonan Webb said: "It is the ideal place for a VC to go on display. They have huge numbers of visitors and people from all over the world will be able to read the story of George Sanders."
The medals, were put up for sale by a direct descendant, Dix Noonan Webb said.
At Leeds Minster last year, the focus was on Corporal Sanders, as the nation fell silent to to honour the centenary of the bloodiest day in British military history.
Cpl Sanders, who enlisted in the Leeds Rifles, took charge of an isolated group of men who were cut off as the British offensive ground to a halt.
Impressing on them it was “his and their duty to hold the position at all costs” they fought a series of desperate actions, all without food and water, later returning to British lines with 19 of his comrades.
He later won the MC for his bravery at Kemmel Hill in April 1918 - last seen wounded in the right arm and leg, but continuing to fire at the enemy at point-blank range.
Wounded and captured he served the last 12 months of the war as a prisoner.
Mr Sanders, one of only three VC winners of July 1 1916 to survive the war, died in Leeds, aged 55.
The price when the auctioneer's hammer came down was £240,000 but when buyer's commission is added the purchaser actually paid £288,000.