Cambridge University looks set to accept a Pounds 2 million endowment from former Prime Minister Margaret Thatcher for a new professorship in "enterprise studies" - but not without a row.

The Cambridge General Board is recommending the establishment of the Margaret Thatcher Professorship of Enterprise Studies from October this year, following an offer of Pounds 2 million from the Margaret Thatcher Foundation, a think-tank dedicated to promoting entrepreneurship.

The recommendation is likely to cause controversy when it is debated at a senate discussion in mid-February.

It is understood that some on the Cambridge governing Council fear the proposals could create a row of similar proportions to the controversy over the university's acceptance of an endowment from British American Tobacco in July 1996.

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"If it is not dirty money," said one source, "it is at least grey money. And beyond that, it looks like a political appointment for an academic post."

When the endowment was first mooted in summer last year, Frank Hahn, a leading Cambridge economist and critic of Thatcherism, said the chair might be exploited as propaganda.

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Now retired, he refused to speak this week.

But the proposal has been welcomed by Sandra Dawson, director of the Judge Institute of Management Studies. She said: "Thanks to the Thatcher Foundation, we will be able to establish Cambridge as a leading centre in this area and ensure that our students had a very well-founded international perspective on the dynamics of successful enterprise."

A spokesman for the Thatcher Foundation said: "This chair is designed to make Cambridge a repository of the knowledge and conditions that enable enterprise to flourish."