The work, which appeared in April, depicts three spies listening in on a phone booth. It was painted on the wall of a home three miles from a GCHQ outpost. Banksy confirmed the work was his on his website. David Houghton noticed the vandalism while he was out on an early morning run in Cheltenham.
"There appears to be silver writing all over the three spies. It's completely ruined. It's awful," said Jenny Lyon, Houghton's girlfriend. "People have worked so hard to keep it here and then somebody overnight has ruined it for everybody."
The piece, "Spy Booth," was originally going to be removed, but businessman Hekmat Kaveh paid 100,000 pounds ($168,337) to preserve the artwork. He believes that the graffiti can be removed, but urged locals not to try to do it themselves and to let professionals take care of the vandalism.
"I believe the original paint had some anti-graffiti products in it and also an anti-graffiti product was put over the top of it. I am confident that it will come off," he said.
Workers will come in on Saturday to remove the graffiti and will use the product Perspex to protect it.
Angela de Souza, who campaigned to save the Banksy piece, said they must work quickly to prevent it from being permanently damaged.
"If we don't get the chemical that is required to remove the spray paint off, it could do permanent damage to the Banksy, so it's a race against time," she told the BBC.