A fundraising campaign by Oxford University to raise £1.25bn from alumni and philanthropists is the biggest money-raising project by a European academic institution.

The aim is to pay for a major expansion and compete with the American Ivy League.

The university already has received pledges of £575m with donations from leading philanthropists including the billionaire Wafic Said, who has given a further £25m to the campaign to pay for an expansion of the Said Business School, based at the university.

The university wishes to compete with US rivals such as Yale and Harvard, which has an annual income of £1.5bn and an endowment worth £17.7bn.

It wants to create a more systematic means of fundraising, promising that the Campaign for the University of Oxford will raise funds for a new campus, library, accommodation and an overhaul of the university's ancient colleges as well as 200 new fellowships worth £2.5m each.

Supporters of the campaign who will be calling for donations include Conservative leader David Cameron, venture capitalist Sir Ronald Cohen, publisher Lord Weidenfeld, Lord Sainsbury, Michael Palin, Richard Dawkins and writers Seamus Heaney and Mario Vargas Llosa.

In April Philanthropy UK reported on a matched funding scheme launched by the Government to encourage high-net-worth individuals to make large donations to their former universities.

The £200m matched-funding scheme’s aim is to help universities create endowments worth billions of pounds, and the money raised will be used to help students from disadvantaged backgrounds.

The announcement of this scheme followed a Sutton Trust 2006 report calling for a UK university matched-funding scheme, which compared the endowments received by UK and US universities. It found that the difference between the 10 largest university endowments in the UK and US had widened by some £12.5 billion in the three years to 2006.