Oxford dons yesterday dealt a surprise blow to the university's leaders by rejecting plans for a £40million business school half-funded by Mr Wafic Said, the Saudi entrepreneur.
The university's congregation, or academic parliament, voted by 259 to 214 against locating the school on a greenfield site in the city centre.
The issue is now likely to be resolved by a postal ballot of more than 3,000 academics and administrators later this month.
Alexander Murray, a history tutor at University College who led the opposition in congregation, said: ''I am amazed and delighted by what has happened. I am very glad the university has recovered its integrity because it was in danger of losing it.''
Proposals for the business school have proved controversial among academics, university staff and local councillors since June, when Said announced his donation of £20million to build the new college.
Opponents objected to the loss of the green space, a sports ground that the university pledged more than 30 years ago to protect from development.
Dons were also concerned by Said's controlling influence on the foundation managing the new school. ''This project smacked of compromise,'' Murray said.
''When we bought the land in 1964 we said it was to be an open space in perpetuity. We are the oldest university in the English-speaking world and we cannot fudge what 'perpetuity' means.'' The university pledged to continue lobbying dons in favour of the business school and said they were misinformed during yesterday's debate.
Professor Sir Richard Southwood, a former vice-chancellor who spoke in favour of the business school yesterday, said: ''All of us who have been involved in this project are disappointed by the outcome of the vote. But I think the outcome could be quite different when people have a chance to reflect after the debate.
''It would be an enormous setback for the university in terms of management studies if the postal vote is lost. The external community would really feel that the university is still living in a cloistered world.''
The university argues that it needs the new building to establish a world-class business studies course that can draw on its expertise in politics, economics and social studies.
Private donors have already pledged £10million to supplement Said's donation.
But even if it wins the postal vote, the university still faces substantial opposition from Oxford councillors who are likely to refuse planning permission.
Mike Woodin, a Balliol College tutor who is also a Green party councillor in Oxford, said: ''The planning grounds are overwhelmingly against this project.''
