Peter Ogden, who announced the scheme yesterday, will pay for up to four pupils a year to attend some of Britain's most famous fee-paying schools, including Manchester Grammar and Westminster School in London.
Bursaries will be means-tested but he is prepared to pay for the pupils' entire education from the age of 11 until they leave school out of funds in the Ogden Trust, which was set up with money made from the Computacenter company he co-founded.
The 10 schools selected for the scheme will be increased to 40 if the project, which is confined to children attending state primary schools, is successful.
Mr Ogden, 52, said yesterday: "I believe there is not much point in dying wealthy and leaving the problem to another generation.
"You have to solve the problem in your lifetime and this gives you the wonderful opportunity to give money away to charitable causes. I chose education because it is so fundamental to the development of an individual and I have the pleasure of giving away pounds 25m to support this."
His decision to fund independent school places comes as the Government phases out the pounds 130m-a-year assisted places scheme, which subsidised bright pupils from poor homes at private schools. The money is being spent on reducing infant class sizes.
Another millionaire, Peter Lampl, has already agreed to buy independent school places for the less well-off. He will turn the 650-pupil Belvedere Girls' School in Liverpool into an "open access" school, with places available to children regardless of parental income.
Mr Lampl is hoping to organise a similar scheme for a boys' school.
Mr Ogden was educated at Rochdale Grammar School and Durham University where he did a PhD in Particle Physics before going to Harvard Business School. He worked as an investment banker on both sides of the Atlantic before co-founding Computacenter, a computer services company, which now has assets of pounds 1.5bn.
The 10 schools in the pilot are Leeds Grammar, Royal Grammar, Newcastle upon Tyne, Manchester Grammar, Bolton School Girls' Division, The Perse School, Cambridge, St Paul's Girls' School, London, King Edward's School, Birmingham, King Edward VI High School for Girls, Birmingham, Portsmouth Grammar and Westminster School, London.
Mr Ogden said he was in favour of selection. "I don't think our education system is going completely down the right direction if it is thinking of closing grammar schools."Reuse content