The prime minister has launched a £200m scheme aimed at encouraging donations to universities.

Tony Blair has said the money will be allocated in matched funding, with the government giving £1 for every £2 of private cash donated to institutions.

Ministers believe the initiative will generate £600m for English universities and promote a culture of individual donation to higher education.

Blair said the government understood that universities needed to have the money "to compete" and to attract more students.

"It is important that our universities have every opportunity to raise the resources they need. That's why this fundraising plan is so important," he said.

"It will incentivise all universities to raise more charitable and private funding.

"Increasing voluntary giving is a vital step in enabling institutions to build up substantial endowments over the longer term, so that they can improve infrastructure, teaching and student bursaries."

Officials said £200m of government money has been allocated for the scheme, which will run for three years from 2008.

Higher education minister Bill Rammell said: "Increasing voluntary giving is key to giving universities greater financial independence and can help institutions to broaden their funding base.

"Income raised through fundraising provides the sector with an additional source of income on top of the extra resources we are already making available through increased government grant and variable fees."