Martin Luther King Jr was to be in the exhibition

The Catherine B Reynolds Foundation pledged the funds in May 2001 to create a "Spirit of America" exhibition to honour about 100 prominent Americans. It had been scheduled to open in 2004.

The Washington Post quotes a letter from Ms Reynolds saying criticism of the exhibit's focus on individuals rather than groups by Smithsonian staff was the main reason she changed her mind.

'Antithesis'

The museum has said that its long-held policy dictates that the institution and not sponsors control the content of exhibitions.

In a letter to the paper, Ms Reynolds wrote: "Apparently, the basic philosophy for the exhibit, the power of the individual to make a difference, is the antithesis of that espoused by many within the Smithsonian bureaucracy, which is 'only movements and institutions make a difference, not individuals'.

"After much contemplation, I see no way to reconcile those diametrically opposed philosophical viewpoints."

The now-cancelled 10,000-square-foot exhibit was to highlight the work and life of prominent Americans such as ice skater Dorothy Hamill, basketball legend Michael Jordan and civil rights leader Martin Luther King Jr.

'Nation's attic'

Catherine Reynolds is one of the biggest arts benefactors in the US and last year donated $10m to the John F. Kennedy Center for the Performing Arts to pay for a decade of "innovative programming".

The Smithsonian, established in 1846 and known in the US as the "nation's attic", has more than 140 million artefacts and is a centre for research and scholarship in the arts, sciences and history.

"We are disappointed that the Catherine B. Reynolds Foundation has decided to withdraw from this project, which was being developed in strict accordance with Smithsonian standards," Marc Pachter, acting director of the American History museum, said in a statement quoted by the newspaper.