Some marvel at the generosity of Henry Tate, the 19th-century industrialist who donated his art collection to the nation and added enough money for a building dedicated to British art.

Others revere Samuel Courtauld, who gave a magnificent collection of mainly French Impressionist and Post-Impressionist paintings to found the Courtauld Institute in 1932.

But now the art world is abuzz with the name of Anthony d’Offay, 68, a retiring former art student who has just handed a £125 million collection of work by modern artists — including Andy Warhol, Gilbert and George and Damien Hirst — to the Tate and the National Galleries of Scotland.

Unlike most donors, he has not asked for his name to be attached to the collection, which will be known simply as “Artists Rooms”.

The galleries have paid £26.5 million for the 725 works, the price that Mr d’Offay paid for them. So vast is the collection — 170 paintings and sculptures and 560 works on paper — that most of Tate Modern would have to be cleared out if it were to be shown in its entirety. There are 136 works by the German sculptor Joseph Beuys alone.

The Government and the Scottish Executive have each put up £10 million of the money and the rest has come from the National Heritage Memorial Fund and the Art Fund, Britain’s largest art charity.

The Tate previously had two works by Gilbert and George and the Scottish galleries one. The d’Offay collection boosts the numbers by nine.

Sir Nicholas Serota, director of the Tate, described the sale as “an extraordinary act of philanthropy”, adding: “I don’t know of anything equivalent anywhere else in the world. There is no profit here for d’Offay. This represents most of Anthony’s wealth.”

John Leighton, director of the National Galleries in Edinburgh, said that it far outstripped any previous donation in Scotland. “This is an absolutely incredible act of generosity.”

Postwar art had, until now, been a weak area of his permanent collection, he said. “At a stroke, it’s been transformed. It is very hard to exaggerate the importance this will have.”

Mr d’Offay told The Times that he was driven by the desire to bring contemporary art to young people. Many of the works had been acquired in recent years with a view to giving them to the nation. He said: “A lot of things were painful to part with, but the jewel for me is walking into a museum and seeing a school party there.”

Hours after the announcement Mr d’Offay learnt that two other collectors were already pledging further donations.

Mr d’Offay studied art at Edinburgh University. Years later he described walking round the city’s galleries as “the defining experience” of his life. He went on to become one of London’s leading dealers, closing his gallery in 2001.

The Government is understood to have written off £14 million in tax as part of the deal but Mr d’Offay said: “I have no idea about tax. I’m interested in education and art.”

Sir Nicholas said that the nation was getting a collection that would fetch even more than £125 million on the open market. That figure, he said, was a valuation on the conservative side by Sotheby’s and Christie’s.

The works by Beuys — who came to prominence through a “performance” in which he explained contemporary art to a dead rabbit — include Fat Chair, in which he covered a wooden chair with a layer of fat and put it on show in a display cabinet. Mr d’Offay said: “I thought it would be ideal to be in the public domain. It will get people to ask the question, ‘What does it mean?’ ”

Two of Mr d’Offay’s few conditions were that the collection should tour Britain, including public institutions in Aberdeen, Cardiff and Wolverhampton, and that the works should be presented as a series of rooms given over to the individual artists.

David Barrie, director of the Art Fund, described the collection as “one of the most important holdings of modern and contemporary international art in private hands”.

Wealthy and generous

Sir Denis Mahon Art connoisseur and member of the Guinness Mahon banking dynasty. He bequeathed his multimillion-pound collection of Old Masters in 1999 rather than after his death to beat burglars

Andrew Carnegie Industrialist, son of a Scottish weaver who emigrated to US in 1848, built a vast steel enterprise and gave hundreds of millions of dollars to libraries and universities

Ludwig Mond Pioneering industrialist whose work led to the establishment of ICI. Bequeathed works by Raphael, Titian, Botticelli and others to the National Gallery in the 1920s

Dorothy Scharf Shy spinster who spent her life collecting watercolours. Eight masterpieces by Turner, along with paintings by Gainsborough and Constable, were among 51 important works she left to the Courtauld Institute of Art

James Cowan Smith Scottish businessman who offered to leave his fortune to the National Galleries of Scotland in 1919. There were two conditions: he wanted a portrait of one of his previous dogs, Callum, to be on permanent display in the gallery, and he wanted the trustees to care for his dog Fury if it survived him. The NGS agreed to both

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