A detailed mechanism for heteroepitaxial diamond nucleation under ion bombardment in a microwave plasma enhanced chemical vapour deposition setup on the single crystal surface of iridium is presented. The novel mechanism of Ion Bombardment Induced Buried Lateral Growth (IBI-BLG) is based on the ion bombardment induced formation and lateral spread of epitaxial diamond within a ~1 nm thick carbon layer. Starting from one single primary nucleation event the buried epitaxial island can expand laterally over distances of several microns. During this epitaxial lateral growth typically thousands of isolated secondary nuclei are generated continuously. The unique process is so far only observed on iridium surfaces. It is shown that a diamond single crystal with a diameter of ~90 mm and a weight of 155 carat can be grown from such a carbon film which initially consisted of 2 · 1013 individual grains.