The gift by Michael Moritz, a billionaire who made his fortune at Sequoia Capital – which invested early in Google, Yahoo and PayPal – is the largest donation towards undergraduate financial support made in European university history.

It will be used to help fund a targeted package of support – worth £11,000 a year per recipient – for students from families earning under £16,000 a year.

Half will be awarded as a bursary, with the remaining £5,500 used as a waiver on Oxford’s £9,000 tuition fee.

About 100 students will receive the scholarship in 2012-13, but Oxford wants ultimately to extend the scheme to all its students from the lowest-income band.

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The university hopes that Mr Moritz’s commitment will help secure further donations in a bid to raise a total of £300 million for the scheme.

His gift will be released in three tranches, with each £25 million contribution triggered once a further £50 million has been raised from other donations. Oxford has also pledged to release £75 million from its endowment fund for the project.

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Mr Moritz, a Cardiff-born Oxford graduate who moved to California in the 1970s, said: “This is a fresh approach to student funding in the UK – fuelled by philanthropy, catering to the dreams and aspirations of individuals determined to excel, while also safeguarding the academic excellence on which Oxford’s global reputation stands.”

The venture capitalist, whose wealth is estimated at $1.8 billion by Forbes, announced in May that he was stepping down from Sequoia’s day-to-day management because he had been diagnosed with a rare, incurable disease.

jack.grove@tsleducation.com