There must be only one criteria for winning a place at Oxford and that is individual excellence

Dr Colin Lucas Vice-chancellor

Pembroke College says a full, speedy and external inquiry will be held into the report.

Vice-chancellor Dr Colin Lucas said he was "appalled" by the allegations of "totally unacceptable behaviour".

He added: "Such action would contravene all the principals on which our admissions process is based.

"There must be only one criteria for winning a place at Oxford and that is individual excellence."

'Secret trust'

He added: "If there's any truth in these allegations, then the college ... must take the strongest measures to restore its good name and that of the university."

The newspaper said that in a taped conversation, the senior college fellow could be heard allegedly revealing that it was not the first time a place had been granted in return for cash.

The paper says he allegedly advised paying the money through a secret trust to avoid leaks to the press.

The Sunday Times reports him as saying: "You must understand that this is absolutely confidential. If this story gets out, we'd all be blown away."

He also allegedly told the fake banker that his son would have to get good grades such as two As and a B, and would have to be capable of getting at least a 2:1 degree in order for the application to be accepted.

Admissions policy

Pembroke is known to be one of the poorest Oxford colleges despite being one of the oldest.

Despite this, Master Giles Henderson said the college was committed to places being awarded on academic merit alone.

He added: "If found to be true, the actions and conduct described are deeply shocking and totally unacceptable."

It is not the first time the university has been in the spotlight over its admissions policy.

Three months ago Trinity College turned down the son of wealthy banker Philip Keevil, despite his father giving �100,000 to the college, because he was not clever enough.

And it was stung by criticism of elitism by Chancellor Gordon Brown when it rejected comprehensive school pupil Laura Spence, who was later accepted by American ivy league university Harvard.