A last-minute deal may be struck next week between Cambridge University and BAT Industries to save a Pounds 1.6 million donation from the tobacco giant to fund a professorship. The university's powerful anti-smoking lobby has fiercely resisted the gift.

BAT Industries, which made profits of Pounds 1.6 billion last year from the sales of brands such as Kent and Lucky Strike, has provided the money for a professorship in international relations to be named after former chairman Sir Patrick Sheehy. As part of the deal, Cambridge will provide around Pounds 1 million for some additional posts and scholarships which will carry the name of BAT Industries.

This proposal has outraged the university's medical community. In a meeting of top professors, details of which the university published last week, regius professor Sir Keith Peters warned of the "moral cost" of accepting the gift, saying it would be "too great". Kay-Tee Khaw, professor of clinical gerontology, said the gift was far worse than the gift from Gert-Rudolf Flick to Oxford. In the Flick case the original source of the German money may have been questionable, but this was in the past and the donor was not the one who was directly involved. "BAT Industries are still currently, directly and actively involved in promoting consumption of a substance that is known to cause death and suffering to vast numbers of people," she said.

Vice chancellor Sir David Williams is expected to recommend that the decision should be put to a vote of all 3,300 dons in the university's parliament, Regent House. But a new deal could be struck ahead of this whereby the additional posts would be named after BAT Industries' financial services company Eagle Star.

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BAT Industries spokesman Michael Prideaux said the company would agree to this arrangement, noting that 40 per cent of the company's profits are derived from its financial business. He added that the company would also accept someone from the medical faculty to represent them on the appointments board.

Backers of the professorship are warning that if the gift is rejected, the university will have to find the money from its own stretched resources. "It could mean a case of robbing Peter to pay Paul," said Pembroke College master Sir Roger Tomkys. In a review earlier this year, the university had accepted the academic need for a chair in international relations, a subject which now attracts some 500 applications annually for its prestigious MPhil course.

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There are also fears that the rumpus caused by the proposed gift might dissuade other multinationals from giving money to Cambridge, thus threatening the university's international standing. Modern history professor Derek Beales said: "This could stop grants from companies which might feel that they will be assailed on moral grounds."

Although the university is, with Oxford, the leading fundraiser among universities, according to a new survey by Oxford Philanthropic, it is still less successful than smaller organisations like the British Museum.