Firstly I opened the image up in photoshop and used the colour picker tool to select a foreground and background colour at the two extremes of the sky gradient.
(you can see this at the bottom of the tool palette on the left). You can then use the gradient tool to create a new gradient without the banding. This can be seen in the image below.

Then I just used the quick selection tool to grab all the dark areas and turn them into a layer mask, and then just used a combination of the eraser & paintbrushes to work into that layer mask to give more detail. (for example make the bushes not be so blocky around the edges and show the mountains to the bottom right. Finally I used a magic wand selection on one of the stars and then did a select similar, this selected all the other stars and allowed me to add them to the layer mask so that they would also show through the gradient. You can see the layer mask in red below.

Apologies for the rather quick/rough explanation, if anybody wants me to explain better or whatever, let me know. Or I can do so on teamspeak or maybe via pm or something.